Report on International Finance 2022

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Task 1: Presentation with Supporting Notes...................................................................................2
Objectives of International Accounting Standards......................................................................2
Relevant Accounting Standards...................................................................................................3
Task 2: Financial Report..................................................................................................................4
Effect of International Accounting Standards on Financial Statements......................................4
Contribution of International Financial Market and Financial Instruments for Financing.........5
Exchange Rates............................................................................................................................6
Task 3: Case Study Paper................................................................................................................6
Case Study on Capital Requirements of Walmart Incorporation................................................6
Task 4: Information Sheet...............................................................................................................9
References......................................................................................................................................12

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Task 1: Presentation with Supporting Notes
Objectives of International Accounting Standards
The role of accounting standard is to communicate the financial position of an
organisation to the various stakeholders of the company indicating the financing performance of
the company. The Accounting Standards thereby provide a system of various principles and rules
that would describe the format and the material information’s contained in the financial
statements of the company. The financial information provided by the management of the
company clearly describes the financial position of the company and the various activities
carried out by the management of the company. There are different cultures, languages and
social and economic traditions and the accounting policies followed by companies operating in
these countries follow different accounting policies. It is very important that the accounting
policies of the company stays well consistent with the International Accounting Standards so that
the stakeholders and the financial users of the company can be able to well analyse the financial
position and performance of the company. The key objectives of the International Accounting
Standards are as follows:
 Catalysing the corporate report presentation in a more cohesive and efficient way thereby
incorporating various accounting report standards for better communicating a range of
various factors that would be materially affecting the ability and value creation of an
organisation on a timely basis (International Accounting Standards 2019).
 Allocation of Resources can be done in a better informed ways by the financial providers
which would be helping better creation of wealth for short and medium term (Integrated
Reporting 2019).

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 Enhancement of accountability and Stewardship along with the broad base of economic
social and financial relationship thereby promoting the interrelationship and
understanding the interdependencies between them.
Relevant Accounting Standards
 Inventory Valuation: The IAS 2 Inventories has relevant requirements and information
that can be used for the purpose of valuation of inventory. The standard clearly states that
the valuation of the inventories that would be measured at a lower of costs basis or at the
net realizable value, whereby outlining the acceptable methods for determining the costs,
including application of Fist in First out Basis and Weighted Average Cost (Iasplus.com
2019).
 Non-Current Assets: IAS 16 sets out the requirement of valuation of the non-current
assets of the company such as property, plants and equipment that is measured initially at
the cost price and is then subsequently measured according to the revaluation model and
depreciated in order to get the depreciable amount that is allocated in a systematic
manner over the useful life of the assets (Iasplus.com 2019).
 Accounting Concepts and Conventions: IAS 8 States about the Accounting Concepts,
Policies and changes in the accounting estimates and errors that is applied for selecting or
applying the relevant accounting policies. Accounting for changes in the various
estimates and the reflection corrections of the prior period can also be taken into better
consideration by the company (Iasplus.com 2019).
 Features of International Finance: International Finance has its own set of
characteristics when compared and contrasted to financial management the key features
of international finance are Foreign Exchange Exposure that is associated with global and

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international operations of the company. Encountering political changes or political risks
during the international finance investment can be the key risks that can be faced by
companies. Companies and Organisations tend to get benefit from the wide range of
international and global finance operations that a company would be in the field of
overall growth and development of the company (Bostonapartments.com 2019). The
major financial institutions that are involved in International Finance Environment are
World Bank, International Monetary Fund, International Bank for Reconstruction and
Development and International Finance Corporation.
 Business Organisation: The selected organisation for the purpose of evaluating the
application of the International Accounting Standard is the Woolworth’s company that
follows the Australian Accounting Standard. If the company follows the IAS Accounting
Standards it would be able to better informed about the various accounting reforms policy
and provide a harmonised financial statement allowing investors to better understand and
compare the financial report of the company.
Task 2: Financial Report
Effect of International Accounting Standards on Financial Statements
In the view of global information on a comparable basis, the IFRS Standards are an
important and vital source to the regulators around the world. The IFRS Standards helps in
contributing economic efficiency and identifying various opportunities for the investors of the
company by better comparison of risk and return generated on a global basis. The IASB would
be bringing consistency in the financial statements of the company whereby the accounting terms
used will be more consistent in terms of usage and application (Alawiye-Adams, and Owoola

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Rekiat 2018). The IFRS Standards would be setting up various standards in order to bring
transparency, accountability and efficiency whereby the various items of the financial items
would be reinstated in accordance with the accounting policy of IASB. In terms of classification,
recognising and recognition of the various accounts and transaction would be done in accordance
with the fair value concepts for better reflection of the financial statements of the company.
Contribution of International Financial Market and Financial Instruments for
Financing
The international finance market helps companies and organisation in getting access to
various capital market in and across the globe enabling and allowing the country to borrow
money during tough time and lend money during good times. International finances gives an
overall boost to the domestic investment and growth of capital via the increased import activity
that is done. The key source of international sources of funds where finance can easily be raised
can be in the form of Commercial Loans and Borrowings. Foreign Currency Loans are provided
by the commercial banks allowing the company meet the various financing activity needs that
the company that allows and enables the companies provide foreign currency loans for the
purpose of business.
On the other hand, with the help of the financing activities that is carried on by
companies and organisations in the context of international finance expose the company with
changes in the fair value of the assets because of the change in the foreign currency (Hardy
2017). It is well important for the companies to hedge the forex risk in order to stabilize the
investment return along with fair value of the assets. Financial Instruments or Derivatives
Instruments such as Options, Swaps, Futures and Forwards allow the company to materially
hedge the financial position of the company.

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Exchange Rates
The foreign exchange rate market is a global decentralised or can be also said as the
global decentralized or an over the counter market for various currencies that can be traded in the
financial markets. The exchange rate market determines the foreign exchange rate market for
every currency thereby including various aspects of buying selling and exchange of currencies
that take place at a predetermined point of time period. The changes in the exchange rate are
primarily seen due to the elasticity of demand, economic growth associated with other
currencies, percentage of raw materials imported, inflation and prevailing interest rate and fiscal
and monetary policies followed in an economy (Pettinger 2017).
The key factors that plays a crucial role for an organisation is primarily the prevailing
interest rate, inflation rate and the exchange rate. Out of which the exchange rate plays a very
crucial role for a multinational organisation as the operations and the investment returns of the
company can be materially affected due to the changes in the foreign currency changes. The
exchange rate plays a very crucial role thereby influencing the level of business operations of the
company, the level of import activity and the overall growth of an organisation that is closely
related with the performance of the foreign exchange currency market.
Task 3: Case Study Paper
Case Study on Capital Requirements of Walmart Incorporation
Walmart Incorporations an American Multinational Retail Corporation that operates as a
chain of hypermarkets, discount departmental stores and various other grocery stores operating
globally. The capital requirements of Walmart Incorporations can be well described with the help
of the international sources of finance that is available to the company. The capital requirement

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of the enterprise are primarily in the field of requirement of operational and financing activity
that are carried on by business. Operational and Financial Capital Requirement for the company
can be better understood with the help of various operational and investing activities that are
carried on by companies in the due course of their operations. The capital requirements of the
company can be for purchases of goods and raw materials, expenses in the field of operational
costs, and investment required for the purchase of fixed assets of the company.
The key financing theories that the company can develop and use for the purpose of its
operations are as follows:
Pecking Order Theory: The pecking order theory gives an important consideration to the
asymmetrical information costs that is associated with the type of financing that is done by
companies. The approaches for using the various sources of finance should be done by the
company in the view of costs associated with each of the financing source that is applicable for
the company. The internal source of funding is primarily given the most amount of preference,
followed by debt financing and external equity financing as the last resort that would be sued by
the company.
Modigliani and Miller Approach: The M&M theory states about the capital structure of the
company that states about the perfect capital market for a company stating that in a perfect
market the capital structure for a company does not matter and important as the market value of
firm is generally determined with the help of earning power and the risk of underlying assets of
the company.
 Proposition I: The proposition states that the undertaken capital structure of the firm
may be irrelevant for a firm given that the value of identical firms would be remaining at

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the same value whereby the choice of finance undertaken would not be affecting the
assets of the company as the value of firm is dependent on the future earnings of the
company.
 Proposition II: Given the fact that tax consideration plays an important role the
proposition says that the financial leverage or boost would be allowing the companies to
reduce the capital structure of the company.
Walmart Inc. takes the understanding of various possible sources of finance that is available
to the company by considering the financial risk and the correlation of the same along with the
business factors that would be helping the company in maintain the capital structure of company.
Foreign Exchange Management: The management of the foreign exchange market can be
better done by the Walmart Incorporation with the help of the financial derivatives instruments
such as Forward Contracts, Currency Futures, Currency Options and Money market hedge that
would be allowing the company stabilizing the financial; position of the company and the overall
investment return that is associated in the context of international finance. Companies can
forecast the interest rate that would be forecasted for the economies under which the operations
of the company is linked so that it can hedge the adverse the economic condition that would be
affecting the overall operations of the company.
Working Capital Strategies: The Walmart Inc. applies various types of strategies including the
hedging, conservative and aggressive policy followed by companies for better management of
the liquidity in the operations of the company (eFinanceManagement.com 2014).

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On an overall basis there are additional macro-economic and business factors that the
company considers during the course of international financing and global operations that are
carried out by the company.

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Task 4: Information Sheet
Research Project Title: Approaches to International financial Management
Research Investigator:
Address & contact details of research investigator:
About the Project
The aim of the research is to evaluate the various approaches to International Financial
Management and the macro-economic factors affecting the International Financial Management
decisions taken by the company. International Mergers, Acquisitions and Investment Policies
under relevant investment categories followed will be evaluated.
Data Collection
The data for the research would be conducted with the help of secondary data that would be
taken from a wide and variety of sources including from various journals and articles.
Content of Study
The key approaches to financial management can be in the field of financial planning, rise of
funds, allocation of funds and financial control policy followed by the companies. There are a
number of approaches that a company can undertake including the traditional and Modern
Approach of Finance. The traditional approach of finance deals and states about the financing
function that is related to the basic functions of finance confining it to only procure funds when
and only needed by a firm or business on suitable terms. Procurement of long-term finance is the
key approach that is followed by company and does not give much importance to the allocation

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and the usage of funds. On the other hand the Modern Approach views the financing from the
view point of procurement of fund as well as effective utilization/allocation of funds. The
allocation of funds thus should be done from a risk return benefit allowing the company to
incorporate various factors.
Risks Involved
The key risks that are involved in this study is primarily in the field of Micro-Economic factors
such as demand and supply of currencies in the context of forex markets and for monetary
financing supplies that is required by companies. The macro-economic risks can be in the field of
interest rate changes, prevailing interest rates and the policies followed by the government in the
due course of business management process. Changes in the macro as well as micro-economic
factors that can affect the overall return associated with investment done and the changes in the
business operations that would be seen from the same.
Benefits of Research Done
The benefits of international financial management can be well evaluated with the help of
various investment actions and strategies that are undertaken by the company. The investment
policies of the company would be certainly wide a class whereby the company can undertake
various financial strategies like application of financial derivative instruments and policies that
stabilizes the international operations of the company.
Rights as a Participant
The participation in the undertaken research would be done on a voluntary basis where the
actions and strategies taken by companies in the context of International Finance would be better
evaluated from the view point of International Finance.

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Monetary Benefits
We will not be receiving any monetary benefits associated with the participation, the data would
not be used by any member of the project team for commercial purposes.
For more information
This research has been reviewed and approved by the Edinburgh University Research Ethics
Board. If you have any further questions or concerns about this study, please contact:
Name of researcher
Full address
Tel:
E-mail:
You can also contact (Researchers name) supervisor:
Name of researcher
Full address
Tel:
E-mail:

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References
Alawiye-Adams, A. and Owoola Rekiat, I. 2018. The Impact of International Financial
Reporting Standards (IFRS) Adoption on the Quality of Financial Statements of Banks in
Nigeria. SSRN Electronic Journal.
Bostonapartments.com. 2019. Functions of International Finance -Information about fuctions of
international finance -"International finance corporate". [online] Available at:
https://www.bostonapartments.com/loans/functions-of-international-finance.html [Accessed 25
Aug. 2019].
Ed.ac.uk. 2019. [online] Available at:
https://www.ed.ac.uk/files/imports/fileManager/Information_Sheet.pdf [Accessed 25 Aug.
2019].
eFinanceManagement.com. 2014. Working Capital Management Strategies / Approaches.
[online] Available at: https://efinancemanagement.com/working-capital-financing/working-
capital-management-strategies-approaches [Accessed 25 Aug. 2019].
Hardy, E. 2017. How do Exchange Rates Affect a Business?. [online] WorldFirst UK Blog.
Available at: https://www.worldfirst.com/uk/blog/international-business/foreign-exchange-
markets-can-impact-business/#gref [Accessed 25 Aug. 2019].
Iasplus.com. 2019. IAS 16 — Property, Plant and Equipment. [online] Available at:
https://www.iasplus.com/en/standards/ias/ias16 [Accessed 25 Aug. 2019].

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Iasplus.com. 2019. IAS 2 — Inventories. [online] Available at:
https://www.iasplus.com/en/standards/ias/ias2 [Accessed 25 Aug. 2019].
Iasplus.com. 2019. IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors.
[online] Available at: https://www.iasplus.com/en/standards/ias/ias8 [Accessed 25 Aug. 2019].
Integrated Reporting 2019. Integratedreporting.org. Retrieved 25 August 2019, from
http://integratedreporting.org/wp-content/uploads/2012/11/23.11.12-Prototype-Final.pdf
International Accounting Standards. 2019. Saylordotorg.github.io. Retrieved 25 August 2019,
from https://saylordotorg.github.io/text_international-business/s19-01-international-accounting-
stand.html
Pettinger, T. 2017. Effect of the exchange rate on business | Economics Help. [online]
Economicshelp.org. Available at: https://www.economicshelp.org/blog/9328/business/effect-
exchange-rate-business/ [Accessed 25 Aug. 2019].