The written report should use the following
format:
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Main body of the paper (7 pages)
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Tables and graphs, if any (1-2 Pages)
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References
Use APA style with footnote. See “Citation
Guideline”.
Single space, paper size 8.5″ x
11″, Times New Roman, 12 font, 1″ margins on all sides
- Choose
a multinational company in an industry that you believe foreign operations
and foreign currency risk exposure play a significant role in the
companies’ core business and their financial performance. Explain the rationale
of your selection.
- What
geographic areas other than their home country does the company conduct
business? What percentage of sales revenue is generated from operations in
these foreign markets respectively? How did the distribution change/evolve
in the past 3-5 years? - Pick
three foreign markets that generate the most sales revenues for the company,
and present the fluctuation of the exchange rate in the past three years
(with monthly data and graphs). - Estimate
the magnitude of impact of the exchange rate fluctuations on the company’s
sales revenue in the past three years (show your calculation). See if you
could find information in the company’s annual reports to confirm or
adjust your estimate. - How
does the company manage foreign currency transaction (and translation)
risk? - Which
method does the company use to translate foreign currency financial
statements? How do you know? What are the translation adjustment amounts
in the past three years? - Compare
your selected company to 3-5 of its industry peers, comment on the
following: - How
does the weight, diversity and location of foreign operations compare to
its peers? Why do you think the company made the decision to operate in
the locales chosen? - How
does the company’s risk management strategy compare to its peers? What
are the similarities and differences in managing their foreign currency
exposure? - Is
the company’s translation method consistent with its industry peers? If
not, did the company disclose the reason why it uses the method as
chosen?
Based
on all above, provide your evaluation of the company’s risk management strategies
and how effectively the strategies were executed as reflected in the financial
results in the company’s past three years.