LCBB6002 International Financial Management Assignment Sample

Managing Finances Across Borders: International Financial Management Assignment

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Introduction Of International Financial Management

“International Finance Management” are the set of all the rules and principles for managing financial management on an international scale. The essay sheds light on the “dividend distribution policy” of the company AstraZeneca. The following company embraces “a progressive dividend policy” which usually draws attention to the investors who are peering at a regular income and who accept “the long-term development opportunities” of the company. The essay also contains the “Market hypothesis theory” along with the “Methods of appraising projects”.

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Dividend Distribution Policy of AstraZeneca

“Dividend distribution policy” is a collection of procedures that the company operates to decide how much of its earnings. It will spread to shareholders in the form of dividends. It summarises the company's strategy for allocating returns to its shareholders and generally takes into account aspects such as “the company's financial health”, development prospects, and capital necessities (KANAKRIYAH, 2020). The policy includes detailed rules about “the timing and frequency” of dividend earnings, the share of profits that will be spread, and any other requirements or conditions that may use. The “Dividend distribution policy” is a judgment made by AstraZeneca’s management about how much of the company's revenues should be allocated to shareholders in the formation of dividends. The main benefit of “a dividend distribution policy” is that it can deliver an enduring and dependable revenue stream for shareholders, which can be particularly important for those who depend on dividends for their retirement earnings or other financial demands.

Companies that pay steady dividends are usually regarded as more durable and financially good, which are able to draw attraction to investors who are examining reliable returns. Paying dividends is able to grow shareholder value by delivering a quick return on assets, which can help to boost demand for the company's claims and, in turn, drive up the share cost. In addition, companies that bear regular dividends help to decrease the volatility of their share cost by supplying investors with an enduring income rivulet, which can assist to compensate for any changes in the company's financial structure. Dividends are taxed at “a lower rate” than other forms of investment earnings like capital gains. This can able to make the dividends an appealing choice for investors who are peering to underrate their tax liability. The meaning of “a dividend distribution policy” is to supply transparency and predictability to shareholders regarding the company's process of allocating earnings.

It also enables the company to address its cash flow, plan for future development, and keep a long-lasting relationship with its investors. Based on the reports of Astrazeneca.com, (2023), the dividend policy of the company is “the progressive dividend policy”. “Progressive dividend policy” is a kind of “corporate dividend policy” in which the company grows its “dividend payout” over time, usually in line with the development of its earnings. This suggests that the charge of dividend produced per share gains as the company's profits grow. In addition, the goal of “a progressive dividend policy” is to deliver a steady and growing income to shareholders, while also showing AstraZeneca’s financial stability and growth prospect. Companies that embrace “a progressive dividend policy” usually draw attention to the investors who are examining a regular income brook and who accept “the long-term growth opportunities” of the company. The contrary of “a progressive dividend policy” is a designated or regular dividend policy, in which the company pays the same dividend payment per share every year, yet of its revenues or financial arrangement (Srikumar, 2022). The board member of the following company is regularly operating its distribution policies. As per the report, in “the year 2022” in the month of December, the “profit and loss” account reserve of “(2021: $11,563 million)”.

Market hypothesis theory

“The Efficient Market Hypothesis (EMH)” is a hypothesis that claims that financial markets are "informationally efficient." However, the current costs of economic assets recall all publicly known facts about those assets. According to this hypothesis, it is inconceivable to always hit the market by trading established on publicly known information because that information is already reflected in the market price (Brown, 2020). There are a total of three versions of the EMH, “The weak form” This interpretation of the hypothesis expresses that all ex-market prices and trading data are already contemplated in “current market prices”. Therefore, technical analysis (analysis of ex-price activities) cannot be utilized to forecast future price trends.

The second form is “the semi-strong form”, This performance of the hypothesis contains “the weak form” and adds that all publicly available data (“financial statements, economic data, and information”) is already brooded in market prices. Therefore, fundamental analysis (analysis of AstraZeneca’s economic statements and economic circumstances) cannot be utilised to indicate future price activities. Based on the study of Singh et al. (2021), the last form is “The strong form”, the understanding of the hypothesis contains “the semi-strong form” and counts that all data, shared and private, is already echoed in market prices. Thus, insider trading based on non-public data cannot be utilized to consistently yield higher returns. The EMH has been subject to complaints, and some claim that the market is not always efficient. Moreover, behavioural finance indicates that human conduct and feelings can lead to market inefficiencies. Additionally, some reasons, are that not all news is equally open to all market players, showing information and possible demand inefficiencies.

The Methods of appraising projects

Economic and financial analysis is an essential aspect of project appraisal as it allows the company to define the viability and profitability of a project. It concerns analyzing the economic and financial aspects of a project to define the potential benefits, expenses, hazards, and recoveries associated with it. “The economic analysis”assumes the overall effect of the project on the economy, including the impact on GDP”, occupation, and other macroeconomic aspects. It also looks at “the social and environmental effect” of the project, including its impact on “the neighbourhood, environment, and stakeholders (?erban and Vescan, 2020). The financial analysis” focuses on the financial viability of the project, including the anticipated “cash inflows and outflows”, “the project's profitability”, and the risks associated with the project. It also believes that the project's financing needs and potential origins of funding. Together, “economic and financial analysis” delivers a complete picture of the project's possible “benefits, costs, risks, and returns”, which is important in deciding whether the project is possible and practical.

The analysis helps stakeholders create knowledgeable decisions about the project, including whether to move with it, how to finance it, and how to control the risks associated with it. Moreover,” economic and financial analysis” plays a vital role in project appraisal, and they support ensuring that the project is financially viable, financially possible, and socially responsible. “Market analysis and technical feasibility” are also two important factors that can significantly impact project appraisal. “Market analysis” affects considering the need for an outcome or benefit in a given market, the contest, and possible revenue streams. A particular “market analysis” helps to decide whether a project is likely to grow or fall. If the market is flooded with similar outcomes or services, or if the need for the offered product or service is down, the project may not be financially feasible.“Market analysis” is an essential aspect of project appraisal as it allows the company to define “the profitability” of a project.

Technical feasibility, involves considering whether the submitted project can be created, executed, and managed using available technology and resources (Rissman et al. 2020). Technical feasibility is important in deciding whether the project can be achieved within the suggested timeline and funding. If the technology needed for the project is not known or is too costly, the project may not be possible. Both “market analysis and technical feasibility” are essential considerations in project review. A project that has a high need in the market and is technically feasible is more likely to be economically viable and thriving. Contrarily, a project that lacks direction in the market or is not technically possible is likely to fail (Fredriksson and Oliveira, 2019). Furthermore, both elements should be positively evaluated during the project review to decide whether the task is worth pursuing. On the other hand, it can be said that, if the technology required for the project is too costly, the project may not be achievable.

Conclusion

The essay contains the “Dividend Distribution Policy” of AstraZeneca along with a brief analysis of the “Market hypothesis theory”. The essay also contains the benefits of the dividend policy and the “Methods of appraising projects”. However, through this method of analysis, the company authority makes their knowledgeable decision regarding the appeasing projects. The EMH stays a widely accepted theory among all academics and practitioners in finance, but its restrictions and beliefs are still the subjects of ongoing discussion and analysis. A particular “market analysis” helps to decide whether a project is likely to grow or fall. The “dividend distribution policy” is one of the effective ways for companies to award shareholders, entice new investors, and improve shareholder value, while also supplying a dedicated income stream for those who depend on dividends for their financial requirements.

References:

  • Astrazeneca.com, 2023 AstraZeneca Annual Report and Form 20-F Information 2022 Available at:https://www.astrazeneca.com/content/dam/az/Investor_Relations/annual-report-2022/pdf/AstraZeneca_AR_2022.pdf [Accessed on: 28th March 2023]
  • Baum, A.E., Crosby, N. and Devaney, S., 2021. Property investment appraisal. John Wiley & Sons.
  • Brown, S.J., 2020. The efficient market hypothesis, the financial analyst's journal, and the professional status of investment management. Financial Analysts Journal, 76(2), pp.5-14.
  • Fredriksson, A. and Oliveira, G.M.D., 2019. Impact evaluation using Difference-in-Differences. RAUSP Management Journal, 54, pp.519-532.
  • KANAKRIYAH, R., 2020. Dividend policy and companies' financial performance. The Journal of Asian Finance, Economics and Business, 7(10), pp.531-541.
  • Rissman, J., Bataille, C., Masanet, E., Aden, N., Morrow III, W.R., Zhou, N., Elliott, N., Dell, R., Heeren, N., Huckestein, B. and Cresko, J., 2020. Technologies and policies to decarbonize global industry: Review and assessment of mitigation drivers through 2070. Applied energy, 266, p.114848.
  • ?erban, C. and Vescan, A., 2020, October. Towards an Evaluation Process around Active Learning based Methods. In 2020 IEEE Frontiers in Education Conference (FIE) (pp. 1-7). IEEE.
  • Singh, J.E., Babshetti, V. and Shivaprasad, H.N., 2021. The efficient market hypothesis to behavioral finance: A review of rationality to irrationality. Materials Today: Proceedings.
  • Srikumar, M.S., 2022. Dividend Policy. International Journal of Multidisciplinary Educational Research, 11(2), p.6.
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