Revenue Recognition in Performance Reporting

Question: Discuss about the Revenue Recognition in Performance Reporting. Answer: Introduction: The main dimension that differentiates international from domestic finance is the foreign exchange exposure. When it comes to business dealing with international finance it will be subjected to fluctuations of the foreign exchange. However, a business that is concerned with domestic finance will not be exposed to foreign exchange (Leo, 2011). An international business deals in international finance. It is, therefore, prone to various economic and political environments. Trade policies differ as per the requirement of the countries. Hence, international finance is subjected to a lot of variations on a grand scale while domestic finance is free from exposure to the macro business environment (Parrino et. al, 2012). Exposure and benefits International finance helps the business to flourish on a larger domain. If the foreign investors are attracted and the project is feasible it will lead to huge opportunities. On the other hand, domestic finance is best for domestic companies that are not keen on high expansion (Choi Meek, 2011). The major dimension this case explains is the manner in which Nike has attained great heights even considering the fact that it has no availability of production facilities in the United States. The company is into the manufacture of athletic shoes, as well as garments in various countries using the subcontractors and the products are sold in the U.S and another international market. It implies that the company is able to use international finance and rotate the funds in an effective manner (Nisen, 2013). Further, it has utilized the macro business situation to utilize the opportunities and attain a strong position. This is why the company attained a paramount success even it does not have the production facility in the UK. It has rotated the funds and strategy in an effective manner. Yes, Nike action supports International financial management goal of shareholder wealth maximization because Nike has utilized the resources in an effective manner. It does not have production facilities in the UK but has used the concept of a subcontractor and delivered finished goods in the UK. Therefore, it has utilized the financial management tool in a manner that has led to immense goodwill and wealth. Further, it has enabled the Asian countries to attract foreign investments and create a better surrounding. This has provided immense employment opportunities and has, therefore, provided a great source of wealth earning capability. Wealth maximization happens when the company is able to take care of the opportunities and macro business scenarios. Shareholder wealth maximization goal is justified by the acts of Nike as the company is able to get hold of the macro business scenario. Further, it has attained a better position in Asian markets and UK indicating that the company has spread all over. This indicates that the company is able to utilize the funds and hence, the overall return is high. This indicates that the return will highly benefit the shareholders. International trade is danger from the exporters point of view because the products are exposed to a lot of fluctuations in the international market. The value of the currencies is exposed to fluctuation and hence, it might create a problem for the exporter. This may even lessen the sales and ultimately lead to a crisis situation. Further, the products are even exposed to disturbances in the international market. If the market conditions appear to be disturbed it can influence the products in a negative manner and hence, the entire consignment might fail in its objective (Wagenhofer, 2014). The exporter might not be aware of the entire situation or might have a different perception. The exporter is unable to take a control of the situation and hence, projects might fail in this manner. Further, the products are even exposed to stringent rules of the foreign country and hence, it might lead to an increment in the price level. When a higher price is charged by the exporter, the product will not be desired by the majority. On the other hand, if the price of the product is kept lower, it will not fit the exporters budget and hence, a difference arises in this regard (William, 2010). Hence, when it comes to the exporter, there is a lot of concern regarding the trade and there are many pitfalls in the case. This can only be minimized but cannot be eliminated altogether. References Parrino, R., Kidwell, D. Bates, T. (2012). Fundamentals of corporate finance. Hoboken, NJ: Wiley Leo, L. J. (2011). Company Accounting, Boston:McGraw Hill Choi, R.D. Meek, G.K. (2011). International accounting. Pearson. Wagenhofer, A. (2014). The role of revenue recognition in performance reporting. OxfordUniversity Press William, L. (2010). Practical Financial Management. South-Western College. Nisen, M. (2013). How Nike Solved Its Sweatshop Problem. Accessed March 15, 2017 from https://www.businessinsider.in/How-Nike-Solved-Its-Sweatshop Problem/articleshow/21122639.cms