Finance Management in Multinational Organizations Essay

Finance Management in Multinational Organizations - Essay Example olibanum the general uncertainty related with multinational firms require that such organizations must develop and implement financial strategies which help them not only to successful manage the risk but also ensure that tenacious profits ar streamed into the firm from its operations. Due to increased risk, multinational organizations a great sens use financial derivatives to elude themselves against certain risks also so that the overall financial interest of the organization remain intact.There are different areas which multinational organizations look to manage in terms of managing the financial resources of the firm. For example, use of debt is whiz of the roughly(prenominal) critical aspects of availing and managing it besides ensuring that firm generates enough cash flows to repay the debt too. Similarly, setting up adequate dividend policies is other area of importance which needs to be taken care of f as shareholders of multinational organizations oft place a larger premium on the overseas operations of multinational organizations.One of the most of import characteristics of financial management at multinational organizations is the dealing in foreign currency. Multinational organizations often deal in more than one currency and also have to translate their earnings and revenues into one base currency therefore besides running other risks multinational organizations also have to deal with the risk arising due to movement in foreign exchange rates. (Stopford & Wells, 2007).Similarly management of debt is also an important aspect of financial management as it directly correlates with the tax management also. In a romp to manage taxes in more efficient manner, multinational organizations often shift the debt to high tax countries in order to free up some liquidity as well as avail overall reduction in cost of debt. This also supports multinational organizations to achieve optim um level of capital building