Question

discuss the source of long term external finance for MNC's. How do they differ from those of domestic companies?

Answer 1

A multinational organization can raise working funds through a variety of sources, for the most part by utilizing the extensive extent of its exercises and its association with worldwide monetary focuses. These sources run the range from value issuance and offering of debt products to government appropriations and financing agreements through private channels.

Government Subsidies

To encourage financial success and grow industrial activities in an area, open authorities concede appropriations to multinational organizations that meet certain prerequisites.

Private Sources

A multinational association frequently depends on private sources to adapt to business monotony, comprehend the operational greatness of a brief money crunch, and make sense of the ideal approaches to ace the focused currents in an area or nation.

Answer 2

Sources of long term external finance for multinational companies:

1. Equity issuance - Multinational companies can raise money in equity markets like the New York Stock Exchange, Tokyo Stock Exchange, London Stock Exchange and Hong Kong Stock Exchange.

2. Selling debt products - They can sell bonds and stocks in the global market.

3. Private sources - They can get money from private lenders like banks and insurance companies. They can raise cash through private equity funds, hedge funds and asset management companies.

4. Government subsidies - The multinational companies which meet certain requirements are granted official subsidies.

The long term financial needs of the domestic companies like sole proprietary concerns and partnership firms are fulfilled by the owners of the companies and by the retained profits. External sources of finance include:

1. Capital Market

2. Special Financial Institutions

3. Mutual Funds

4. Leasing Companies