Modern System of International Financial Management in Multinational Companies

Economic Annals-ХХI: Volume 148, Issue 1-2(2), Pages: 8-11

Citation information:
Bulkot, O. (2015). Modern System of International Financial Management in Multinational Companies. Economic Annals-XXI, 1-2(2), 8-11. https://ea21journal.world/index.php/ea-v148-02/

Oksana Bulkot
PhD (Economics),
Lecturer,
Kyiv National University named after Taras Shevchenko
90-a Vasylkivska Str., Kyiv, 03022, Ukraine
oksanam@yandex.ru 

Modern System of International Financial Management in Multinational Companies

Abstract. Introduction. Multinational Companies (MNCs) are unique economic entities because of their turnover, sales, global production activity and financial system. The defining feature of the MNCs functioning is their ability to get free access to any resources in globalized economy. The transboundary movement of goods and services, skilled labor and management, and thus experience actually means ensuring uninterrupted MNC reproduction processes globally. Realization of such MNCs’ potential provides their strong financial system, which is currently recognized as one of the structural elements of the system of global finance.

Purpose of this article is to summarize contemporary theoretical and practical approaches to MNCs’ international financial management as well as to disclose the special features of its functioning in contemporary global economy.

Results. The key aspects of MNCs’ financial management are described. On the basis of author’s conclusions, the following six components of MNCs’ international financial management are disclosed: working capital management, strategic financial management, financial instruments for long-term international financing of MNCs, mechanism of subsidiaries financing, planning and forecasting of MNCs financial activity, theoretical approaches to financial decisions substantiation. Also, the correlation between MNC financial system and global financial environment has been analyzed.

Conclusion. MNCs’ finance is a system of monetary relations, resulting in the economic activities of MNCs and is necessary for the accumulation, allocation and efficient usage of capital and income funds. The peculiarity of the financial management of MNC is that it is performed within the entire system of MNC. It means that financial flows have to be consistent within the activities of branches, subsidiaries and other structural units of MNC that are often found not only within the different regions, but also located in markets with different rates of development, The result of financial goals achieving should be solving the issues of minimization the cost of capital, maximization the value of MNC, rationalization of ratio between own and borrowed funds, ensuring the planned profitability, risks minimization, development and implementation of the standard indicators of equity, assets, sales, profits growth.

Keywords: International Financial Management; MNC’s Finance; Global Financial Environment; Long-term International Financing of MNC

JEL Classification: G15; G30; G32

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Received 11.12.2014