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The three primary financial objectives are:
1. Maximization of consolidated, after-tax income.
2. Minimization of the firm’s effective global tax burden.
3. Correct positioning of the firm’s income, cash flows, and available funds.
Limited Funds Movement
Free Funds Movement
Evaluating the potential for foreign investment includes:
of a product will actually pay for it
on or after delivery.
Pacific First Bank
Financing of trade
1. Endaka Construction requests a letter of credit to be issued by its bank.
2. Yokohama Bank will determine if Endaka is financially sound and capable of making the payments required.
3. Yokohama Bank issues the letter of credit to the exporter’s bank, Pacific First Bank.
4. Pacific First assures Vanport that payment will be made after evaluating the letter of credit.
5. The lumber order is loaded onboard the shipper.
6. Vanport draws a draft against Yokohama Bank for payment.
7. Pacific Bank confirms the letter of credit and collects from Yokohama Bank.
Initial Expenses and
Operating Cash Flows
Terminal Cash Flows
1.A cash flow that is denominated in a foreign country.
2. The cash flow will occur at a future date.