Question 4 Efficient cash management is a very important aspect in any business organization. It's even paramount of a multinational organization that have business around the globe. Efficient cash management can reduce its investment in precautionary cash balances and also lower the number of foreign exchange transactions and the associated expenses. Required: a. Explain FOUR (4) techniques to optimize the cash inflows for a multinational corporation. (12 marks)

b. Gadang Corporation is a large multinational company based in Malaysia with a number of subsidiary companies around the world. Currently, foreign exchange exposure as a result of transactions between Gadang Corporation and its subsidiary companies is managed by each company individually. Gadang Corporation is considering whether or not to manage the foreign exchange exposure using multilateral netting from Malaysia, with Ringgit as the base currency. The following cash flows are due in three months between Gadang Corporation and three of its subsidiary companies. The subsidiary companies are Paragon Co. in Vietnam (currency VND), Kulim Co. in Thailand (currency, THB) and Daiman Co. in Philippine (currency, PHP).

The exchange rates are as follows. VND 5,738/RM1; THB 8.9390/RM1; PHP11.8840/RM1

Calculate, using a tabular format (transactions matrix), the impact of undertaking multilateral netting by Gadang Corp. and its three subsidiary companies for the cash flows due in three month. (13 marks)

Table 5 \\begin{tabular}{|l|l|l|} \\hline Owed by & Owed to & \\multicolumn{1}{|c|}{ Amount } \\\\ \\hline Gading Corp. & Paragon Co. & VND 4,000 million \\\\ \\hline Gading Corp. & Kulim Co. & THB 4.3 million \\\\ \\hline Daiman Co. & Kulim Co. & THB 7.6 million \\\\ \\hline Daiman Co. & Paragon Co. & VND 3,500 million \\\\ \\hline Kulim Co. & Paragon Co. & VND 5,250 million \\\\ \\hline Kulim Co. & Gading Corp. & THB 3.4 million \\\\ \\hline Paragon Co. & Daiman Co. & PHP 5.0 million \\\\ \\hline Paragon Co. & Gading Corp. & VND 4,500 million \\\\ \\hline \\end{tabular}