In: Finance
Describe the importance of international capital structure. What risks can you identify when working with cash, credit and inventory management? Provide your rationale and any supporting data.
International capital structure is combination of different kind of capital. equity capital consisting of preferred stocks, common stocks, retained earnings, and different kinds of debt capital Such as bonds as well as money market securities.
The importance of international capital structure is same as importance of capital structure for a multinational company as as-it-is highly important to get with an optimal mix of equity and debt capital in the overall capital structure which is highly resistant to any kind of change in exchange rate and which will not be affected much by international risks.
offering stocks in International Financial Market is different because it can lead to to quick downgrade and dilution of shares as investors do not feel secure so it is very important to decide between leverage and issuance of share because in international market, leverage has always an upper hand and it is highly risky too.
When working with cash, credit,and inventory management, one should be highly sceptical about their recording into the books of accounts as there are different procedures about recording of cash and credit transactions and inventory management should also be important because it should be according to the general accepted accounting principle all over the globe. once you go global, the standard should be defined according to the global needs and it should always be in adherence to the best global policies in order to attract investor and keep them for a long period of time.