文档介绍：INTERNATIONAL
FINANCIAL
MANAGEMENT
EUN / RESNICK
Second Edition
18
Chapter Eighteen
Multinational Cash Management
Chapter Objective:
This chapter discusses various issues associated with multinational cash management.
Chapter Outline
The Management of Multinational Cash Balances
Cash Management Systems in Practice
Transfer Pricing & Related Issues
Blocked Funds
1
The Management of International Cash Balances
The size of cash balances
The currency denomination
Where these cash balances are located
2
The Size of Cash Balances
The optimal size of the firm’s cash balances depend upon:
The cost of keeping “too much” cash on hand.
. the opportunity costs of holding cash
The cost of not keeping enough cash on hand.
. the trading costs associated with having too little cash
The variability of cash flows.
3
Choice of Currency
By maintaining cash balances in a particular currency, the MNC is essentially speculating (or hedging?) in that currency.
4
Where Cash Balances are Located.
Should the firm have centralized cash management in the home country?
Or should the firm let each affiliate handle it locally?
Where are borrowing costs lowest and investment returns highest?
5
Cash Management Systems in Practice
ting
Is an efficient and cost-effective mechanism for settling interaffiliate foreign exchange transactions.
Not all countries allow MNCs payments
By ting, more unnecessary foreign exchange transactions flow through the local banking system.
6
ting
Consider a . MNC with three subsidiaries and the following foreign exchange transactions:
$10
$35
$40
$30
$20
$25
$60
$40
$10
$30
$20
$30
7
ting
ting would reduce the number of foreign exchange transactions by half:
$10
$35
$40
$30
$20
$25
$60
$40
$10
$30
$20
$30
8
ting
ting would reduce the number of foreign exchange transactions by half:
$10
$35
$40
$30
$25
$60
$40
$10
$10
$20
$30
9