Handbook of the international financial management †Free Samples

Question: Discuss about the Handbook of the international financial management. Answer: Transaction exposure: The financial transactions denominated in foreign currencies are subjected to exchange rate fluctuations which are to be deal with effectively by the organization using different techniques. Accounts receivable: The financial statements of the company is reported and prepared in US dollars. However, significant portion of the revenue and expenditures of the company are transacted in Euro, Canadian dollar, Pound starling Swiss francs and Mexican pesos. Though the company uses hedging technique however, it is not possible to hedge each and every single transactions which are denominated in foreign currency (Lastra 2015). Thus, the financial performance as well as financial position of the company are affected due to the fluctuations of foreign currencies in relation to US dollars. The accounts receivable of the company over the years have significantly been influenced due to the fluctuations of foreign currencies. It can be seen especially as the US dollars is relatively strong currency compare to other foreign currencies in which the company operates the accounts receivable balances denominated in foreign currencies have often reduced in terms of their values in US dollars. The accounts recei vables have been hedged to ensure there is no adverse effect on the final receipts of the receivables due to fluctuations in foreign exchange rates (Brooke 2016). Accounts payable: The fluctuations of foreign currency exchange rates vice a versa US dollars have also include the accounts payable balance in the financial statements of the company and with it, the financial position of the company. The accounts payable represents the amount that the company owes to its creditors in relation to the revenue expenditures of the company (Cavusgil et al. 2014). The foreign currencies in which the company operates all have adversely fluctuated in relation to the US dollars as a result of which the financial position of the company have been effected. The accounts payable mostly in foreign currencies have been translated using the closing exchange rates of different foreign currencies in exchange of US dollars. Since most of the foreign currencies have all depreciated as against US dollars the accounts payable balances have shown significantly lower balance with translation of foreign accounts payable in US dollars (Titman et al.2017). The accounts payable balance as a result of depreciation of foreign currencies at the date of the reporting of the financial statements of the company the accounts payable balances which have been translated using the closing exchange rates of foreign currencies as against the US dollars thus, the accounts payable balances have reduced significantly (Deresky 2017). Short term asset: The Short-term asset of the company have also been affected due the fluctuation of foreign exchange rates against the US dollars. The company have significant portion of its activities which are transacted in foreign currencies. As a result there are number of short term assets which accrue to the company from its core business operations. The short term assets which are denominated in currencies different from US dollars have obviously depreciated over the last financial year to result in financial losses for the company (Viterbo 2018). The short term assets of the company would not have been depreciated had the company reported its financial results in currency different from the US dollars. Hence, the short-term asset of the company has also been depreciated due to the translation of the balances in short term asset using US dollars. The short term assets of the company which are denominated in foreign currencies have been hedged to ensure that the transaction expose for such asse ts are within the limits. The reporting currency of the company being US dollar which is one of the strongest currencies across the globe has certainly helped the company to pay off its short term liabilities from the collection of the short term assets denominated in foreign currencies. Reference Brooke, M.Z., 2016.Handbook of international financial management. Springer. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014.International business. Pearson Australia. Deresky, H., 2017.International management: Managing across borders and cultures. Pearson Education India. Lastra, R.M., 2015.International financial and monetary law. Oxford University Press. Titman, S., Keown, A.J. and Martin, J.D., 2017.Financial management: Principles and applications. Pearson. Viterbo, A., 2018. The Role of the International Financial Institutions in Fragile and Conflict-Affected Countries. InPeace Maintenance in Africa(pp. 111-134). Springer, Cham.