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Manage Working Capital

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The Acme Company is exploring many strategic options. Whichever global business strategy the Acme Company eventually chooses, the firm inevitably will require the services of a bank to help manage its working capital. Many major multinational banks provide a variety of working capital and multinational cash management services.
Some U.S. banks also have international operations. If your company acquired a company in another country, would you choose to bank with a local bank in that country, or would you select a U.S. bank with international operations? Why would you make this selection? A few US banks with international operations are below:
• Bank of America
• HSBC
• Citibank

Objective:
Different types of foreign exchange exposure faced by the MNC.
The structure of international financial markets and institutions, the range of instruments traded therein.
How do financial management decisions of multinational firms differ from those operations.

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The response addressed the query posted in 731 words with references.

//Banking and finance play very significant role in promoting business and commerce in any developed or developing country. Banking, here, is not only confined to depositing or lending money function, but also includes many other functions. In this context, the following discussion will shed light on roles played by banks in promoting MNCs. //

Banks roles in promoting MNCs:

With industrialization, there has been an immense growth of existing firms and new firms. Now, company's growth directly or indirectly affects the economy of the nation. The economy with more rapid industrial growth is considered to be more developed. This may not be possible without adequate financial resources or financial aids. Due to this reason, more focus is now being given in making financial institutions more dynamic in terms of functions. It has been realized that only depositing and providing loan to MNCs are not sufficient; this has led to expansion of functional areas of banks. Earlier, banks were only providing loans and depository facilities, but now banks provide various other facilities to promote MNCs. The following facilities come under bank services:

Banks provide foreign exchange to promote export and import.

They provide ...

Solution Summary

The response addressed the query posted in 731 words with references.

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Similar Posting

Working capital management and Operating cycle

Q1
Two companies, A and B, have the following balance sheet accounts:
A B
Current assets $ 150 $ 800
Fixed assets 300 2200
Current liabilities 75 600
Long-term debt 75 1000
Equity 300 1400
a. Compute values for all of the ratios that measure
working capital for firms A and B.
b. Compare Firm A to B with regards to its need for
working capital and how it finances its working capital
(short-term vs. long-term financing).

2. The Latigo Company has the following financial information:
Sales $200
Cost of goods sold 100
Administrative expense 44
Depreciation 40
Interest expense 2
Tax 7
Net profit $ 7
Cash $ 5
Accounts receivable 20
Inventory 25
Fixed assets 50
Accounts payable 5
Note payable 15
Long-term debt 20
Equity 70
a. The current assets to sales ratio for the industry is 0.20. State whether Latigo make more or less use of working capital than the industry.
b. Compute the working capital turnover for Latigo and for the industry.
c. Compute the operating cycle and the cash conversion cycle for Latigo.
d. The industry average cash conversion cycle is 112 days. Compare the industry to Latigo and identify any inferences that you can make.

A.
CURRENT ASSETS TO SALES RATIO
CURRENT ASSETS 50
SALES 200
RATIO 0.25
It is utilizing working capital less efficiently as it has got higher ratio then the industry.
The lower the current-assets to-sales ratio, the less a firm needs to invest in working capital
to generate a dollar of sales, which usually means that the firm is utilizing its working capital in a more resourceful manner.

b. Compute the working capital turnover for Latigo and for the industry.

I need help with questions 1 and 2 in the problem section at the back of the attached chapter. I need all solutions in Microsoft excel along with the written answers to the questions.

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(See attached file for full problem description)

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