Foreign Exchange
a) As the AUD is gaining value (buying power) and the EUR is losing value over time, June is in an excellent position with her European suppliers granting her a 60-day credit period and her Australian customers paying on 30-day credit terms: the AUD she receives in payment within 30 days will be worth more in EUR 30 days later, when her own payments are due, meaning she will save money.
b) One hedging strategy June could employ to shield against movements in either direction by either currency would simply be to shorten credit terms with suppliers and customers, paying as soon as bills were in and collecting as fast as possible, in a currency-swap type scenario. This has other business implications...
By May 2012, MedAssets long-term debts are approximately $959.94 Million. Additionally, MedAssets secures loans that carry interest rates. With significant amount of loans that the company has secured and notes that the company has issued, the company faces interest rates risks. To mitigate the effect of risks associated with the fluctuation of the interest rates, the company enters into the series of financial instrument to guide against the risks from
Financial Derivatives This study emphasized the importance roles of financial derivatives, which has been known for the last decade and its effects on the Global financial crisis. It further analyzes the impact of financial derivatives and how it can be controlled to prevent corporations from incurring a lot of risks. It also explains the existence of financial derivatives since 1970, to the recent Global Financial Crisis which occurred in the 2006. Risk
Financial Structure of Financial Environment Financial structure is the mixture of financial instruments, financial markets and other financial institutions operating within the economy. ( Fase & Abma, 2003). Financial structure consists of a company's assets, capital and liabilities. Financial structure is also specific equity and long-term debts that firms employ to finance its business operations. Typically, financial structure of a company generally affects the business operations and value of a business.
Bank of America and Merrill Lynch would have to be separated and Goldman Sachs could no longer be a bank holding company. "Commercial banks would take deposits, manage the nation's payments system, make standard loans and even trade securities for their customers -- just not for themselves. The government, in return, would rescue banks that fail. On the other side of the wall, investment houses would be free to
" (2009) Yam states that over the past year the need existed to involve the government more deeply in the banking industry and especially in the area of deposit guarantees and in the supervision of the risk management of banks. Yam states that it is "…gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have
In addition, the exchange provides an avenue for recourse if some remedy is required for a fraudulent transaction. Problem 15-12. The operating asset turnover of 5 times on operating assets of $20 million implies a total sales of $100 million. The return on operating assets being 25% indicates net profit of $5 million. The total costs therefore are $95 million. DOL = Contribution Margin / Operating Margin In this case, the operating margin
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