International Finance BMG704 Assessment CW1

INTERNATIONAL
FINANCE BMG704
ASSESSMENT CW1

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
a. The two recent development in the international environment which has impact on the
recent business and develop impact in future. .......................................................................3
b. Dividend policy and sources of finance.............................................................................5
c. Analyse the financial performance to calculate ratios........................................................7
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
International finance interplays the role between the two countries. It focuses on foreign
direct investment and calculating the exchange rate of different countries (Agarwal and et.al,
2020). To increase economic interaction, the company’s focus on international finance. This
report contains the details of Airbnb company which is a public company registered in the U.S.
This company works in the global market, room rent on vacations, and conducts tourism
activities. The total revenue of Airbnb through the hotel industry was 5.99 billion U.S. Dollars in
2021. The recent development of Airbnb affects its dividend policy. Airbnb provides services for
a short period at a lower cost. It earns revenue from host commission and guest services. Airbnb
has developed in the market because it provides a platform for stays worldwide. The company
share price is lower as compared to IPO value. It distributed the dividend to its stakeholder as
regularly.
TASK
a. The two recent development in the international environment which has an impact on the
recent business and development impact in the future.
Development means introducing a new change to change the situation. Development is
not simply a word it is no interaction between two people. It includes the natural environment
and converts the natural resource into cultural resources from the point of view of the economy.
The purpose of development is to increase the quality of life and expansion of local regional
income and increases employment opportunities (Al and et.al, 2021).
The first major development in Airbnb has taken place is in form of innovation that enhances
good customer experience. Three fundamental shift have been bought in travelling, to make it
more flexible less stressful. Says Brian Chesky, Co-founder and CEO of Airbnb, “People can
travel anytime, they are travelling to more places and they are staying longer”. There is new
feature introduce in the app that flexible date, matching and destination. This feature provides the
customer to decide everything according to their need and desires. Whenever they want they
alter and change package according to there will and wish. All this is done to increase the
customer satisfaction .

This is also had make things easier for the host with the new booking process. Information
technology automatically arrange the photos of the rooms and destination according to the guest
desires. This resulted in 50% reservation in four days. Which is really good for the host.
The second development in the global environment that has affected the performance of
Airbnb is Covid-19. Before Covid-19 Airbnb achieved growth in European cities. In the second
quarter of 2020 Airbnb, the revenue growth is 61%. Due to a global public health emergency by
the world health organization from January to march the coronavirus outbreak was greatly
disrupted. The travel bans, event cancellations, and become social distance to reduce the virus
impact, tourism and travel activity decreased so that bookings of Airbnb cancel. The strategy
made by Airbnb is to increase its financial performance (Arner and et.al, 2022).
The opportunities are made by the manager of Airbnb to recover the demand which is fall
between march to august of 2020. Airbnb will reduce the demand for international travel bans
and increases demand for domestic travel such as in china and the united states. This may
become better placed to regain booking and nonmetropolitan areas may spur people to be more
interested in vacation so that Airbnb recover income in the future.
 Airbnb should evaluate the host and focuses price with the competitors so that demand
for listing is based on tourist and the listing's placing on the search rankings.
 Taking great photos is an important factor of Airbnb because host improves their
experience on Airbnb.
 Airbnb comes to IPO so that investors can invest in Airbnb company and will expire
employee stock option due to IPO.
b. Dividend policy and sources of finance
Dividend Policy- It is the policy which decides about the distribution of surplus profit
earned by the company. There are many types of dividend policies such as regular dividend
policy, irregular dividend policy stable dividend policy, and no pay dividend policy. In a regular
dividend policy, the shareholder gets dividend every year, the stable dividend policy only the
fixed percentage of profits paid to its shareholder. In this policy, the shareholders are uncertain
because they are not known what amount of dividend is received. In an irregular dividend policy,
the company does not obligation to pay the dividend to the shareholders (Brunstein and et.al,
2019). Expected dividend yield for the company is between 39.1% - 43.6% in the year 2020
which is lesser than the year 2019 that is 41.8%-44.3% . the dividend yield for the company is