Recent Developments in International Finance and Impact on Associated British Foods

INTERNATIONAL FINANCE

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUTION..............................................................................................................................1
ASSESSMENT TASK....................................................................................................................1
a) The two recent developments in international financial environment that have impacted the
performance and development of the..........................................................................................1
b) Key elements of international financial and risk management strategy..................................2
c) The financial analysis of the performance and position of the Associated British Foods for
the year 2019-20 with the use of ratio analysis...........................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUTION
International Finance is also known as the international macroeconomics that refers to study
of the monetary interactions between the two or more nations. They focus mainly over the
exchange rates, interest rates and foreign direct investment. In a globalised environment every
country depends over other for the services and the products from the developing countries. The
present report discusses about recent developments in international financial environment and
that have impacted the performance and development of the company. It will also analyse the
impact of these developments in near future. Study will provide about the international financial
and risk management strategy. Further major part of the report will cover the analysis of
performance of the company for the year ending 2019 and 2020 with the use of ratio analysis.
This has proved to be useful tool for analysing the performance and for taking sustainability
measures. It will discuss about Associated British food which is packaged food retailing and
processing company listed over London Stock Exchange. It has spaces across United States and
Europe.
ASSESSMENT TASK
a) The two recent developments in international financial environment that have impacted the
performance and development of the
The roaring twenties have started with the post war economic prosperity which ended
with Wall Street Crash. The international financial developments or changes have impacted the
business. There are several changes that have occurred in the year 2019 and 2020 having
significant impact over the business and its practices. The changes for the politics and the Post
Brexit negotiation have not directly but indirectly have impacted the company and its
development. The two changes impacted the performance of Associated British Foods
1 US Trade Disruptions
The US being a major economy of the world has direct impact over all the other nations
associated with it. Country is major trade partner of the company and therefore the new trends of
the US economy and financial changes are to be considered by the company too. The political
environment of the country is having several trade negotiations about increasing the tariff rates
and the exchange rate fluctuations (Rădulescu, 2016). The trump government has imposed
significant trade restrictions and imposed heavy tariffs that have led the business to suffer losses.
The sales revenues have decreased and also higher tariffs have led them to suffer decrease in the
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profit margins. However, company has managed to deal the disruptions by increasing the sales in
other market places. US consists of big market share of the company and it has to manage the
operations of business accordingly for maintaining and increasing the share further. The
elections in next year may bring some new changes for the company.
2 Brexit
The impact of Brexit is seen by almost all the companies of UK. This has resulted in around
6% reduction in the investments and lowering the employment by 1.5% lower. The company is
now required to bear the new costs that have risen due to the post Brexit. It has impacted the
business as company has to pay taxes over the trade to EU nations. Many of the businesses are
impacted due to this post Brexit. It could be evaluated that the business due to have seen lower
productivity. This has led to the business to adopt new strategies for restructuring the policies
and take new actions for the business for maintaining their revenues and achieving a
considerable growth. The costs have been increased and the sales have not grown up to the
required level.
Impact in future
These changes have led the company to manage the policies and procedures so that the
impact over business could be reduced. These changes may further increase the costs of
company causing it to increase the prices of products. ABF may see effect over its sales and
revenues due to the trade disruptions and the Brexit in future also (Blazsek, 2018). It is required
to expand the business over new markets for maintaining the growth and sustainability of the
business. It is essential for the business to ensure that it carefully manages the risks associated
with these changes in the international finance environment.
b) Key elements of international financial and risk management strategy
Sources of Finance
It refers to the sources from which company raises its finances. The sources of finance is
a significantly important decision of the company as it impacts the whole capital structure of the
business. It serves the costs and benefits of the organisation therefore the financial sources are
chosen with very deep analysis of the costs and sources.
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