International Financial Management
Release Date: 2017-09-21Basic Information
1. Course Type: Compulsory Major Courses
2. Class Hour: 36
3. Credit: 2
4. Suitable for: Graduate Students of Finance
Course Introduction
This course illustrates the basic principle of international financial management, introduces the latest tools and methods of international financial management and the application of these principles and methods in the real world. The course includes introduction to international finance, monetary and financial history, foreign exchange market, the foreign exchange risk hedging, international financial management and fraud in the international financial management.
Course Objectives
This course is one of the professional courses of finance and investment fields, its teaching goals mainly involve following topics: the international financial environment that international enterprises are facing with and how to offer them basic decision guide about how to take advantage of foreign exchange policy, macro environment of offshore finance market and cross-border tax. Secondly, this course helps students to manage the micro practice of international enterprises operation, practice of international investment and financing, such as the choice of capital structure of the project, capital budgeting methods, liquidity and foreign exchange risk management and so on.
Outline of Course Content
Chapter 1 Financial environment of international enterprise
Overall Objective: the goal here is
1. Making clear the relationship between exchange rates and interest rates, price indices.
2. Understanding the international exchange rates institutional environment faced by enterprises.
3. Understanding international investment and financing environment of enterprises
Contents:
1. The main content: Exchange rates and exchange rates system, environment of offshore finance and tax.
2. Basic concepts and knowledge: Interest Rate Parity, PPP, International Fisher Effect, the European Currency Markets, International Tax Havens.
3. Problems and applications:
(1) Understanding the relationship between three rates.
(2) Understanding the European currency market operation mechanism
(3) Understanding the impact for enterprises brought by international tax environment.
Thinking and Research:
1. Influence and countermeasures to the exchange rate system environment in international enterprise production and management
2. How does enterprises finance in European currency market, how to avoid tax by international Tax Havens.
3. How does enterprises adapt to diversity of international finance management
Chapter 2 Financial leverage and capital structure
Overall Objective: the goal here is to
1. Understand the general characteristics of enterprises' capital structure, make clear the basic goals when enterprises use financial leverage, understanding the special-purpose financial leverage
Contents:
1. The main content: Capital Structure, Financial Leverage, Capital Structure of International Enterprise.
2. Basic concepts and knowledge: Capital Structure, Financial Leverage.
3. Problems and applications:
(1) Understanding the financial significance of enterprise capital structure and capital structure.
(2) Understanding the usage of financial leverage
(3) Understanding the application characteristics of international enterprises leverage
Thinking and Research:
1. What's the characteristic of international enterprises capital structure, what constitute its capital structure?
2. Which factors influence capital structure policy?
3. What's the financial leverage using effect of international enterprises?
Chapter 3 Capital budgeting of international corporate
Overall Objective: the goal here is understanding the characteristics of various methods of capital budgeting assessment, understanding the capital evaluation characteristics of international enterprises through case analysis.
Contents:
1. The main content: Return on Investment, Payback Period, NPV, Internal Rate of return method, Budget Case
2. Basic concepts and knowledge: NPV, Internal Rate of Return Method and cash flow
3. Problems and applications:
(1) Understand the assessment requirements and its significance of NPV and Internal Rate of Return Method.
(2) Apply NPV to assess international enterprises project.
Thinking and Research:
1. Distinguish the assessment difference between from project perspective and parent company perspective.
2. How to develop internal Capital budgeting and apply it to Greenfield Investment.
3. How to adjust overseas project basic on risk.
Chapter 4 Working capital management of international enterprises
Overall Objective: the goal here is
Understanding that there are currency type differences in international enterprise working capital management, exchange rate risk and the characteristics of international capital flow control, management features of international corporate cash, inventory, and accounts receivable as well as how does international enterprise repose profit, cash flow and capital, maximize profits and minimize global tax burden to optimize capital usage.
Contents:
1. The main content: Capital Structure, Financial Leverage, Capital Structure of International Enterprise.
2. Basic concepts and knowledge: square-root rule, matrix of cash receipts and payments, multilateral debt tie, transfer pricing, tax havens, credit evaluation index, factoring, EOQ, inventory hedging
3. Problems and applications:
(1) Apply these theories to analyze international corporate cash holdings
(2) Understanding the usage of financial leverage
(3) Discuss how does international enterprise apply transfer pricing and tax havens in practical operation.
(4) Specific measures and application of accounts receivable management of international enterprise.
(5) Strategy application of inventory hedging of international enterprise.
Thinking and Research:
1. Discuss how does international enterprise apply transfer pricing and tax havens in practical operation.
2. Specific measures and application of accounts receivable management of international enterprise.
3. Strategy application of inventory hedging of international enterprise.
4. Research on the integrated cash management, currency management, operations control and IT services.
Chapter 5 Foreign exchange risk management of international enterprises
Overall Objective: the goal here is to
Distinguish three kinds of foreign exchange risk faced by enterprises; analyze advantages and disadvantages of hedging foreign exchange risk,; make comments on institution main points of foreign exchange risk management.
Contents:
1. The main content: Accounting Risk, Trading Risk, Operation Risk, Measurement of Transaction Risk, Case Analysis.
2. Basic concepts and knowledge: Accounting Risk, Trading Risk, Operation Risk, Hedging.
3. Problems and applications:
(1) Identify transaction risk and determine the right hedging object
(2) Understand the principles of management of accountant risk.
Thinking and Research:
1. Analyze how the exchange rate movements change the enterprise performance through quantity, cost, price, and other key variables.
2. In order to avoid operational risks, how does international enterprise draft strategy as response?
3. Take one of the following famous journals as a starting point, finding out a company currently has major operational risks.
The Financial Times website : www. Ft. com
The economist website : www. economist. com
The Wall Street Journal website : www. wsj. com
4. Choose one international company such as Coca - Cola or Pepsi, query its financial statements and analyze its operational risks.
Class Hour Distribution
Week 1 2 3 Chapter 1
Week 4 5 6 Chapter 2
Week 7 8 9 10 Chapter3
Week 11 12 13 14 Chapter4
Week 15 16 17 18 Chapter5
The total course hour is 24(45 minutes each class hour), which will be evenly distributed in 18weeks, that is every week will have 2 course hours.
Text book
[1] International Finance Management, Zhu Ye, Fudan University Press,2003.
[2]Multinational Financial Management, Mao Fugen, Northeast University of Finance and Economics Press, 2008.
[3]International Investment, Li Dongyang, Northeast University of Finance and Economics Press
Course requirements and grading:
Grading Policy: Your grade for the course will be calculated as follows:
Regular Homework and Class Participation 20%
Final Exam 80%
Attendance: Regular attendance is an important requirement for successful performance in this course. If a student repeatedly misses classes, question will be raised with the administration and suggest the student withdraws from the course.
Homework problems: problem sets will be assigned regularly. All of the students will get a chance to present your homework solutions in class. At this point, it is not as important to have a correct solution as it is to demonstrate that you have worked on your homework seriously. Please, start looking at problems on right away so that you can ask for help if you need it. In addition to my office hours and email, you can use the homework discussion board on Blackboard for homework help. Your homework problems will help you to understand the material and to systematically prepare for exams. Class participation and homework will count for 20% of your grade.