IB 333

  1. Maximization of shareholder value
    the ultimate goal of the management of a multinational firm to increase the vaule of the shareholder's investment as much as possible
  2. Net Present vaule (NPV)
    The sum of the present valuesof all cash inflow investment project discounted of the cost of capital
  3. Capital Budget
    The financial evaluation of a proposed investment to determine whether the expected returns are sufficient to justify the investment expenses
  4. Capital Outlaws
    Upfront costs and expenses of a proposed investment
  5. operating Cash flows
    Cash flows arising from the firm's everyday business activities
  6. Terminal Cash Flows
    Salvage valueor resale value of the project at its termination
  7. Debt-Equity Stucture
    A firm's combination of capital obtained by borrowing from others, such as banks (debts), and capital provided by owners (equity).
  8. Working Capital Management
    The management of a firm's current assests (cash, accounts receivable, invenories) and current liabilities (accounts payable, short-term debt).
  9. Financing cash flows
    The cash flows arising from the firm's funding activities
  10. Netting
    Cash flow coordination between a corporation's global units so that only one smaller cashtransfer mustbe made
  11. Cash Pooling
    Used by multinational firms to centralize individusl units' cash flows, resulting in less spending or foregone interest on unnecessary cash balances
  12. Leads
    Paying a debt early to take advantage of exchange rates
  13. Lgs
    Paying a debt late to take advantage of exchange rates
  14. Re-invoicing
    The policy of buying goods from one unit, selling them to a second unit, and re-invoicing the sale to the next unit to take advantage of favorable exchange rates
  15. Internal Bank
    A multinational firm's financial management tool that actually acts as a bank to coordinate finaances amoung its units
  16. Transaction exposer
    The potenial for losses of gains when a firm is engaged in a transaction denominated in a foreign currency
  17. Natural Hedgin
    The structuring of a firm's operations so that cash flows by currency, inflows against outflows, are matched
  18. Contractual Hedging
    A multinational firm's use a contracts to minimize its transaction exposer
  19. Economic Exposure
    The potenial for long term effects on a firm's value as the result of changing currency values
  20. Translation exposure
    The potenial effect on a firm's financial statements of a change in a currency values
  21. Accounting Diversity
    The range of Differences in national accounting practices
  22. Direct Taxes
    Taxes applied directly to income
  23. indirect taxes
    Taxes applied to non income items, such as value- added taxes, excise taxes, tariffs, and so on
  24. Value-added tax (VAT)
    A tax on the value added at each stage of the production and distribution process; a tax assessed in the most European countries and also common amoung Latin American countries
  25. Letter of Credit (l/C)
    Undertaking by a bank to amke payments to a seller upon completion of a set of agreed on conditions
  26. Bill of Lading
    A contract between an exporter and a carrier has accepted responsibility for the goods and will provide transportation in return for payment
  27. Bank Draft
    A financial withdrawl document drawn against a bank
  28. Trade Draft
    A financial withdrawl document drawn against a company
Card Set
IB 333