International Finance Assignment : Luxury chocolates Ltd

International Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
TASK 2............................................................................................................................................3
1.3 Impact of IAS on the financial statements............................................................................3
2.2 contribution of international financial market.......................................................................4
2.3 importance of exchange rate market.....................................................................................4
TASK 3............................................................................................................................................5
3.1 Requirement of capital by multinational enterprise..............................................................5
3.2 Financial theory contribution in developing capital structure...............................................5
Evaluation of foreign exchange management.............................................................................6
Planning, monitoring and management of short term assets.......................................................6
Working capital management strategies.....................................................................................6
TASK 4............................................................................................................................................6
4.1 Analysis of micro and macro environment factor.................................................................6
4.2 Analysis of international acquisition, mergers and investment policies...............................7
Fiscal and monetary policy.........................................................................................................8
Benefits and risk of cross-border mergers and acquisition.........................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International accounting standard provides general guidelines to the institutions and
corporate body which help them to prepare and present the financial statements such as income
statements, balance sheet, cash flow etc. Luxury chocolates Ltd. Company is situated in England
which sale the highly expensive chocolates to the customer. The report highlights the role of
international accounting standard in the organisation and how they treat the financial transaction.
For the treatment of financial transaction separate accounting standard are prepared which
provide a set of guidelines to evaluate and measure the impact on the company. The report
explains the contribution of financial instruments and markets in collecting the finance for the
company and the requirements of capital for the multinational companies. It also focuses on the
micro and macro-environmental factor which influence the decision making process of
international financial management. The study highlights the international merger, acquisitions
and different investment policies for the financial management.
TASK 1
Covered in PPT
TASK 2
1.3 Impact of IAS on the financial statements
International accounting standard provide framework to treat the financial transaction and
use the appropriate methods to deal with the transaction. For example there are different methods
to calculate the inventory such as LIFO, FIFO, weighted average etc. different accounting
standard are used for the valuation of income statements, balance sheet and cash flow statement.
IAS 1 help the Luxury Chocolates Ltd. Company to prepare the financial statement to
present the financial position in the international market and increase the profit of company by
providing their luxuries chocolates (Newman and et.al., 2016). It helps to adapt the different
accounting concept such as going concern concept, accrual basis concept to record the
transaction. It discloses the accounting policies and help the company to work under the
government guidelines and minimize the political and economical risk. IAS 2 is refers to manage
the inventory in the company. It helps to set the price of product and services. It uses the FIFO
and weighted average method for they valuation of chocolates stock and provide the chocolates
according to the demand and available stock.
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IAS 7 is used for cash flow statement to present the total inflow and outflow of cash in the
company to meet the daily requirement. The objective of the standard is to present the
information about the changes in cash and cash equivalents. It helps to prepare the financial
statements with the accuracy and reliability of the data. IAS 16, 36,37 and 38 are used to
valuation of current assets and liability, non current assets, contingent assets and liability, asset
impairment and intangible assets (Abata, 2015.). These standard help the company to prepare the
balance sheet and record all the assets and liability of the company to present accurate financial
position to the different stakeholders. It supports Luxury Chocolates Ltd. company to gain the
market share and profit and expand the business by collecting finance from the various sources
and attract the investors by the financial position (Teece, 2017).
2.2 contribution of international financial market
International financial environment affect the decision making process. The changes in the
currencies values and taxation policy affect the business. For example decreasing the value of
currency highly affect the import of raw material and ingredients. It increases the price of the
product which ultimately reduces the profit. International financial market and instruments help
the company to collect the finance from the different sources and support the decision of
company (Ghosh, Ostry and Chamon, 2016). International financial market provide a place to the
Luxury chocolates Ltd. Company to trade in global market and attract the global investor to
invest in the company wealth. Financial instruments also provide the borrowing and loan facility
to the Luxury chocolates Ltd. Company to raise the capital and import the ingredients to improve
the quality and attract the global customer.
2.3 importance of exchange rate market
Exchange rate market refers to the place where the foreign currency are exchange. It helps to
regulate the foreign currency, rectify balance of payment and protect the domestic industries in
the global market.
Importance
 The foreign exchange market provide the foreign currency to regulate and operate the
business of Luxury chocolates Ltd. Company.
 It helps to balance the BOP of the company by increasing the foreign direct investment
and manage the economic growth.
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