EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 1, Problem 11PROB
Summary Introduction
To determine: factors that make financial decision-making more difficult for firms that operate in foreign markets
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How is multinational financial management different from financial management as practicedby a firm that has no direct contacts with foreignfirms or customers? What special problems andchallenges do multinational firms face? Whatfactors cause companies to “go multinational”?
One of the ways to analyze a company’s financial performance is to compare its performance with those of
Multiple Choice
foreign governments.
manufacturers producing their products.
its competitors.
the U.S. government.
1. What impact would harmonization of national accounting standards have on international businesses?
2. Are U.S. firms at a competitive disadvantage because they cannot use accounting reserves as German firms do?
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- What are the primary challenges that arise in accounting for and analyzing international transactions? Illustrate how differences in accounting standards, currency exchange rates, cultural factors, and regulatory requirements can impact the financial reporting and analysis of multinational companies operating in various countries.arrow_forwardWhich of the following is not a reason for U.S. firms operating in foreign markets? A.Better economic and political environment (in the U.S.) B.Less expensive labor C.Tax incentives D. To achieve international diversificationarrow_forwardHow does accounting theory address the challenges and complexities of multinational corporations, including issues related to currency translation, transfer pricing, and global financial reporting standards?arrow_forward
- What are the economic system differences that affect international financial management at Apple Inc.?arrow_forwardEntry modes for entering new countries vary in their degree of control. What does control mean? O The degree of risk a firm has in its foreign activities The degree of ownership a firm has in its foreign activities O The degree of profits a firm has in its foreign activities O The degree of influence a firm has in its foreign activitiesarrow_forwardHow important of international trade (imports and exports) to the world economy? What accounting issues arise for a company as a result of engaging in international trade (imports and exports)? Why might a company be interested in investing in an operation in a foreign country (foreign direct investment)?arrow_forward
- What are some of the issues that arise in evaluating and maintaining control over foreign operations? Why might a company want its stock listed on a stock exchange outside of its home country? What would be the advantages of having a single set of financial reporting standards used worldwide?arrow_forwarda. Discuss factors that distinguish multinational financial management from financial management as practiced by a purely domestic firm; and b. Identify for corporations to build manufacturing plants abroad when they can build them at home countryarrow_forwardWhat are the differences in economic systems that affect international financial management?arrow_forward
- What are the cultural difference factors that affect international financial management?arrow_forwardWhy is the agency problem more pronounced for multinational corporations? Check all that apply: MNCs are often larger than purely domestic companies. There are no international laws to prevent agency problems. Monitoring managers in foreign countries is more difficult. Managers raised in different cultures may have different goals and values.arrow_forwardWhy do firmsexpand into other countries?arrow_forward
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