The process of coordinating cash inflows and outflows among subsidiaries so that only the balance in cash is transferred is known as ________.
A) dividend remissions
B) transfer pricing
C) multilateral netting
D) currency hedging

Question

Quizplus · Accepted Answer

Multilateral netting is the process of offsetting and coordinating cash inflows and outflows among subsidiaries in different currencies. By using multilateral netting, only the net balance in each currency needs to be transferred, resulting in lower transaction costs and reduced foreign exchange risk. Dividend remissions refer to the transfer of profits or dividends from subsidiaries to their parent company. Transfer pricing refers to the pricing policies used by companies when transferring goods or services between different subsidiaries. Currency hedging is the practice of using financial instruments to manage or mitigate foreign exchange risk.

The Process of Coordinating Cash Inflows and Outflows Among Subsidiaries