Question: You re the CFO of the Overseas Sprocket Company which imports
You're the CFO of the Overseas Sprocket Company, which imports a great deal of product from Europe and the Far East and is continually faced with exchange rate exposure on unfilled contracts. Harry Byrite, the head of purchasing, has a plan to avoid exchange rate losses. He suggests that the firm borrow enough money from the bank to buy a six-month supply of foreign exchange, which would be kept in a safety deposit box until used. "We'd never have another unexpected exchange rate loss again," says Harry. Prepare a polite response to Harry's idea. Explain why you do or don't like it, and suggest an alternative if you feel one is appropriate.
Answer to relevant QuestionsJacob Cornwall has a business in which he’s invested $250,000 of his own money, which is the firm’s only capital. (There are no other equity investors and no debt.) In a recent year the firm had net income of $20,000 for ...Why do we need the quick ratio when we have the current ratio? Write your own analysis program to calculate a common size income statement and the ratios introduced in this chapter. To keep the exercise reasonably simple, just provide for one year of ratios and one common size ...Why would a rational borrower take out a NegAm loan? You're the CFO of the Kraknee Roller Skate Company, which sells roller skates worldwide and also builds and operates roller rinks. Some time ago Archie Speedo, the head of international marketing proposed selling skates in ...
Post your question