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Block 2: Finance in a Global Context, image, image, image, image, image,…
Block 2: Finance in a Global Context
Economic & Financial Flows
Global Imbalances
Leads to...
Economic/Political Problems
2008 Financial Crisis
Reduce Debt
Slowly
Quickly
Deficit/Surplus
Balance of Payments
Leads to...
Country Comparisons
Economic Indicator
Current, Financial & Capital Accounts
Foreign Direct Investments
Multinationals
Controversial
Offshoring
Global Considerations
Transfer Pricing/Mispricing
Arms-Length Principle
Traditional Method
Can lead to...
Tax Avoidance
Hard to Implement
Unitary Taxation & Profit Apportionment
Alternative Method
Combined Reporting
Country-by-Country
Economic Substance of MNCs
International Financial Reporting Standards
Vision
Efficiency
Transparency
Accountability
Standards
Items to Report on
How to Report Items
Item Disclosures
International Accounting
Standards Board (IASB)
Independent
Collabs Worldwide
Transparent Processes
Engages with Professionals Globally
Foreign Exchange Market
Exchange Rates
McBurger Index
Purchasing Power Parity
Compare Exchange Rates to Keep Burgers Same Price Across Countries
Govnerment Intervention
Buy Own Currency
Increase Interest Rates
Increase Value
Currency
Equilibrium
Supply = Demand
Shifts in...
Demand
Overseas Incomes
UK Interest Rates
Speculation £ May Increase in Value
Supply
UK Incomes
Overseas Interest Rates
Speculation £ May Decrease in Value
Supply for £ Abroad
Imports
Need £ = Trade for Foreign Currency
£ Appreciation
Stronger £ = Cheaper Imports
Price Elasticity
Elastic = Big Quantity Change
Inelastic = Small Quantity Change
Demand for £ Abroad
Price Elasticity of Demand
Elastic = Big Response to Price Changes
UK Exports
Foreign Buyers need £
to Buy UK Goods
Exchange Rate
Stronger £ = More Expensive for Foreign Buyers = Demand Falls
