Question

Explain in 500 words. Mention reference and plagiarism free. Explain Working Capital Management and Multinational Financial Management.

Answer 1

Working capital management

Workingcapital is the capital required to meet the day to day business expenditure and to run the business smoothly. It is the difference of current assets and current liabilities.

Current asset is an asset which is expected to be converted into cash within a year. It includes Accounts receivable, marketable securities, inventory, prepaid expenses, etc.

Current Liabilities are those liabilities which are expected to be paid off in a year. It includes Accounts payable, outstanding expenses, bank overdrafts, etc.

Working capital management is a strategy or a process of managing the company's current assets and current liabilities so as to ensure that the company meets it's current as well as future short-term liquidity needs.

Multinational Finance Management

It means managing finance in an international business environment. Today a country is not confined to its own territory, rather it does business in other countries as well, which was made possible due to globalisation and liberalisation, which opened doors to fellow countries to run business in other countries.

But doing business in other country is not so easy as various factors are included like different currency, different political and legal systems, different opportunities and so forth, which can effect the business.

A company operating in various countries has to manage finance in every country. It has to make payments, make investments, collect payments, etc which is to be done in the currency of that particular country in which business is being operated and by keeping in mind the economic and political system of that country. Therefore managing finance becomes crucial.

There are several currency derivatives, international mutual funds, cross-border stock listing, multi currency bonds which should be managed properly and which gives access to capital market accross the world.

References:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.slideshare.net/mobile/sandeeppatel544/sandeep-patelmba-sec-1-iiisem-ifm&ved=2ahUKEwiu7YfooOjoAhUszjgGHSWCDlAQFjACegQICxAM&usg=AOvVaw30qTWBHS0LfKw6CNI22En9&cshid=1586880186822

https://www.google.com/url?sa=t&source=web&rct=j&url=https://efinancemanagement.com/international-financial-management&ved=2ahUKEwiu7YfooOjoAhUszjgGHSWCDlAQFjAMegQIAhAB&usg=AOvVaw2iz5AgIFkv1bmH1ZC6m2xp&cshid=1586880186822

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.investopedia.com/terms/w/workingcapitalmanagement.asp&ved=2ahUKEwjkx_aNpujoAhU5wTgGHeFcBYUQFjAOegQICxAz&usg=AOvVaw087MubYdsAt0oeTpi-sSFc

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.cfainstitute.org/membership/professional-development/refresher-readings/2020/working-capital-management&ved=2ahUKEwjkx_aNpujoAhU5wTgGHeFcBYUQFjAhegQICBAB&usg=AOvVaw3sVNLlpHhVpUmg_78rLm0j