Please enable JavaScript.
Coggle requires JavaScript to display documents.
Block 2 - Coggle Diagram
Block 2
Economic + Financial flows
International financial institutions
IMF
Stability of exchange rates and international payments so countries can interact
World Bank
Country members who end money to poorer members
Economic + financial flows
Balance of payments - individual, firms and government body transactions are tracked
Foreign direct investments - Companies who run offices/plants in other countries to allow them to sell products and services in that country
Imbalances
Public/Private sector spending - Public sector deficits whereas private sector savings
Countries with current account surplus/deficits - surplus countries can result in lower demand, longer recessions.
Multinationals
Companies that run in several countries
Tax considerations and exchange rates
International tax rates
Paying taxes - records mandatory and tax contributions based on profit
Multinational corporations
Transfer pricing - Different currencies are used to invoice and then reinvoiced at the receiving branch using the national currency.
Issues for business
Value of assets can change
Foreign currencies affect their operating profit
International financial reporting
Evolution of regulation
Initially unregulated, there has been focus on creating common reporting standard for businesses to accounts are understandable and comparable in different countries
FCC introduced to reduce company bankruptcies using a balance sheet
Capital market function - economic performance to financial markets
Jurisdiction rules
Different laws in countries for example USA common law, Italy Roman (code) law meaning major chanes in regulation would need to be inforced for countries to record financial information identically
IFRS Standards
Transparecy/accountability and efficiency when companies use the stand reporting standard. Increases credibility of companies of multiple jurisdictions