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Investing in a Multinational Company

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Research a large multinational company in which you might like to invest. Then determine the most significant risk factors associated with investing in the company you selected when compared with investing in a domestic company. Provide specific examples to support your response.

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Solution Summary

This detailed solution helps identify a large multinational company as a potential investment, determining significant risk factors that may be associated with investing in a global company compared to a domestic company. Examples and APA references are included.

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I would be interested in investing in BMW, a German company that manufactures automobiles and motorcycles. It is one of Germany's leading car manufacturers. However, there are significant risk factors involved in investing in this multinational company. The primary risk is the method by which BMW reports its results, which have changed in the last decade to avoid dual accounting of internal and external reporting. BMW rearranged its balance sheet by converting to International Financial Reporting Standards, which impacted the financial statements in terms of cost of sales, other operating expenses, and interest expenses (BMW Group, 2004). This recalculation could affect the consistency of data an investor reviews, particularly if they were not aware of the change.

In addition, the company, as a result of having large-scale operations, has ...

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Sally Baldwin, Ed.D
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  • BA, University of Southern California
  • MSS, United States Sports Academy
  • Ed.D, Boise State University
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