International Financial Management 1 - Critical Analysis of Five Guys Company

This report provides a critical analysis of Five Guys Company's international financial management, dividend distribution policy, efficient market hypothesis theory, and project appraisal methods.

International Financial
Management 1

Table of Contents
Introduction......................................................................................................................................3
International Financial Management......................................................................................4
Challenges Five Guys Company Is Facing in The International Markets..............................4
Critical analysis and evaluation of Five Guys Company dividend distribution policy..........5
Critically analyse the efficient market hypothesis theory of Five Guys Company operations.
................................................................................................................................................6
Critically analyse and evaluate Five Guys company methods of appraising projects...........6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
Books & Journals...................................................................................................................8

Introduction
International financial management is also widely named as international finance. It can be
defined as the management of the financial management from the perspective of business
environment. It helps in trading and generating money with the help of exchanging the foreign
currency effectively. The concept of international financial management helps a business
organization to gather a lot of information, knowledge and analytical thinking in order to conduct
the deep and efficient study by understanding the economic considerations through the
international border (De Winter, and et.al., 2021). In context to this report, Five Guys Company
has been taken into consideration for the purpose of conducting the critical analysis on the basis
of international financial management. The report will be including various components namely
dividend distribution policy, also critically analysing the efficient market hypothesis. In addition
to this, different methods to appraise projects in relation to the Five Guys Company are also
effectively analysed.

International Financial Management
It is an important concept that helps a business organization to deal with the business
related operations across the international borders. For the purpose of executing the strategies for
an international trade it can be considered that it is highly important for a business organization
to have a complete knowledge regarding the international financial management. In context to
Five Guys Company, financial management can be considered as a major tool that helps in
maintaining the sufficient supply of the monetary funds across the international borders. There is
various importance of the international financial management for the business entity Five Guys
Company which are explained below:
 The international financial planning helps a business organization in the effective
financial planning.
 In order to acquire to plan and acquire the international funds, international financial
planning is helping Five Guys Company to deal with it effectively.
 International financial planning also helps Five Guys Company to make certain important
and critical financial decisions.
 International financial management also manages the economic stability of the business
organization namely Five Guys Company.
Challenges Five Guys Company Is Facing in The International Markets
The international financial challenges can be defined as the the different risks and losses which
may incur during the various business operations in the international cross borders namely
currency fluctuation, various accounting scandal and many more (Challenges of International
Finance, 2021). In relation to Five Guys Company, there are various challenges that are being
faced while maintaining the quality of international business operations effectively (Julian,
Wijngaard, and De Vries, 2021). The major financial challenges that are being faced by the
respective company are mentioned below:
 Interest Rate risk: The Five Guys Company Group’s policy was majorly to target the
fixing a minimal of 50% of finance costs for major non - guaranteed liability of the
Group. On 29 February 2020, the percentage of finance cost bearing liability at fixed
rates were 68% (2019: 78%). The weighted average rate of interest which was paid on
major non - guaranteed liability this financial year which excluded the joint ventures and
associates, which was at 3.30% (2019: 3.76%).

 Credit Risk: It can be defined as the risk that have not been met by the counterpart for
the financial responsibilities which can lead to the financial loss for the business
organization. This can be considered as the one the major challenge that Five Guys
Company is facing in the international markets.
 Liquidity Risk: Liquidity risk can be defined as is defined as the risk of having losses
which may result from the inability to deal with the financial payment obligations in a
well-timed manner.
 Compliance with the political policies: While expanding the business operation across
the international border it becomes a major challenge to deal with the political policy in
regards to the financial obligations of different nations in order to run the business
smoothly as well as peacefully.
 International Currencies: In order to strike a balance between the various international
currencies in different nations around the world can also be considered as the biggest
challenge for the business namely Five Guys Company. In general-purpose, a weaker
currency that transforms the imports to be more expensive, while challenging exports by
making them inexpensive for international customers to buy in the foreign exchange
management.
Critical analysis and evaluation of Five Guys Company dividend distribution policy
Dividend Policy can be defined as the significant policy which is used by the business
organization to use the structure that be used for the purpose of paying out the dividend to the
potential shareholders (Smicker, 2021). A business organization can use various types of
dividend policy utilized for the purpose of maintaining the considerable levels of dividend
payouts. In context to the respective business organization Five Guys Company, the company
has paid an interim dividend to the shareholders that has been declared as well as paid before a
company which has ascertained it’s for the earnings of full-year (Dividend Policy, 2012). Such
dividends are primarily distributed to the shareholders of a business organization's common
stock on different basis mainly quarterly or semi-annual. The respective company is using a
stable di8vidend policy which is aiming at providing a dividend to the shareholders which
mainly aims at the providing the dividends at a normal and predictable rate. It may happen the
company is earning at a greater side or lower side but it will still be able to provide the
dividends. The major aim is to stabilize the dividend policy along with the long-term growth plan

of the company despite of the unpredictability. This approach gives the shareholder more surety
about the procurement of the amount and timing of the dividend. The company have also been re
investing certain amount of the earnings in the business operation to attain a higher level of
efficiency.
Critically analyse the efficient market hypothesis theory of Five Guys Company operations.
Efficient market hypothesis is also knowing as the efficient market theory which states that the
prices of the shares reflects the insightful information and the consistency of the alpha generation
is not possible. According to this theory, the financial stocks are majorly traded on its fair value
when they are exchanged which makes it impossible for the investors to purchase the stocks
which are undervalued. Therefore, the theory states a conclusion that it is majorly impossible to
surpass the overall market via expert stock selection. One of the ways, an investor can aim to
achieve higher returns is majorly through buying the riskier investments. In context to the Five
Guys Company, the stocks of the company are getting affecting with the various market
fluctuations around the international financial markets extensively. Being one of the biggest
business organization of United Kingdom, the stock prices of the company gets immediately
affected by any kind of the new information regarding the business venture floating in the
domestic as well as the international marketplace.
Critically analyse and evaluate Five Guys company methods of appraising projects
Project appraisal can basically be defined as the process of evaluating the proceeding of a
project or a proposal in a proper structured was in order to understand the viability of the project
effectively (Ruffino and Jarre, 2021). It can be considered as one of the most efficient cost and
benefit analysis which is having an objective to deal out with the feasibility of the business
organization. There are various methods namely economic, financial, technical and social for the
purpose of appraising the project in an effective manner. In context to Five Guys Company, the
various project appraisal technique used by the company in order to appraise the projects are
briefly explained below:
 Payback Period: It is one of the appraisal technique which is used by the business
organization for the purpose of investment appraisal stating the amount of time taken in
order to recover the amount of initial investment.
 Internal rate of return: It is one of the prominent method of appraising the large project
and the investment proposals which is being applied by the Five Guys Company on order

to obtain the outcome for the above mentioned concerned purpose to achieve a higher
level of efficiency.
 Profitability Index: It also one of the method of analysing the appraisal of the project in
order to find out whether the business organization's respective project is viable as well as
profitable. In context to Five Guys Company, this method is used in order to assess the
respective investment will help the company to create or the disrupt the value of the
company considerably.
Conclusion
From the above report, it can be concluded that it is highly important for a business
organization to understand that the application of the international financial management to
conduct the business operations. In context to the company chosen namely, Five Guys Company
is effectively using the various strategical components of the international financial management
to deal the business operation. It helps in trading and generating money with the help of
exchanging the foreign currency effectively. Also, the respective business organization is also
facing a lot of challenges in the international markets. In addition to this, the various project
appraisal techniques have also been explained in relation to Five Guys Company in order to
analyse feasibility along with the viability of the international financial business operations.

References
Books & Journals
De Winter, J.C.F., and et.al., 2021. Replicating five pupillometry studies of Eckhard
Hess. International Journal of Psychophysiology, 165, pp.145-205.
Julian, A.M., Wijngaard, O. and De Vries, R.E., 2021. Compensation preferences: The role of
personality and values. Frontiers in psychology, 12.
Smicker, J., 2021. COVID-19 and ‘crisis as ordinary’: pathological whiteness, popular
pessimism, and pre-apocalyptic cultural studies. Cultural Studies, 35(2-3), pp.291-305.
Ruffino, P. and Jarre, M., 2021. Appraisal of cycling and pedestrian projects. New Methods,
Reflections and Application Domains in Transport Appraisal. p.165.
Dividend Policy, 2012. [Online] Available through:
< https://www.researchgate.net/publication/314573369_Dividend_Policy_A_Co
mparative_Study_of_UK_and_Bangladesh_Based_Companies >
Challenges of International Finance, 2021. [Online] Available through:
< http://www.svtuition.org/2016/10/challenges-of-international-finance.html >