9e
By Charles W.L. Hill
McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 20
Accounting and Finance in the International Business
20-3
What Is Accounting?
Accounting is the language of business
it is the way firms communicate their financial positions
Accounting is more complex for international firms because of differences in accounting standards from country to country
differences make it difficult for investors, creditors, and governments to evaluate firms
It is difficult to compare financial reports from country to country because of national differences in accounting and auditing standards
20-4
20-6
Many developing nations have accounting systems that were inherited from former colonial powers
lack of trained accountants
20-8
Standardization of accounting practices across national borders is probably in the best interests of the world economy
will facilitate the development of global capital markets
20-10
20-11
20-13
20-15
If the net present value of the discounted cash flows is greater than zero, the firm should go ahead with the project
20-18
Cash flows to the parent may be lower because of host country limits on the repatriation of profits, host country local reinvestment requirements, etc.
20-20
Political change can result in the expropriation of a firms assets, or complete economic collapse that renders a firms assets worthless
20-21
20-22
20-23
Most experts suggest that firms adopt the structure that minimizes the cost of capital, whatever that may be
20-25
20-26
Most banks also charge a transfer fee for moving cash from one location to another Multilateral netting can reduce the number of transactions between subsidiaries and the number of transaction costs
20-27
Double taxation occurs when the income of a foreign subsidiary is taxed by the host-country government and by the home-country government
20-28
20-30
20-32
20-33
20-34
20-37