A US firm makes purchases from different parts of the world and sells them through its...

 

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A US firm makes purchases from different parts of the world and sells them through its subsidiaries. The following is the inter-subsidiary payments matrix (i.e. Canadian subsidiary owes $36 to the US subsidiary, and so on). You need to suggest the required cash netting to reduce the conversion costs Receipts Canada France Japan US Canada -- 22 36 Disbursements France -- -- 6 70 Japan 19 14 51 US 6 12 8 -- A US firm makes purchases from different parts of the world and sells them through its subsidiaries. The following is the inter-subsidiary payments matrix (i.e. Canadian subsidiary owes $36 to the US subsidiary, and so on). You need to suggest the required cash netting to reduce the conversion costs Receipts Canada France Japan US Canada -- 22 36 Disbursements France -- -- 6 70 Japan 19 14 51 US 6 12 8 --

Answer rating: 100% (QA)

To reduce conversion costs and optimize cash flows the firm can implement netting arrangements among its subsidiaries Netting involves offsetting inte... View the full answer