tailieunhanh - Lecture Multinational financial management: Lecture 12 - Dr. Umara Noreen

Lecture 12 - Managing economic exposure and translation exposure. In this chapter students will be able: to explain how an mnc’s economic exposure can be hedged; and to explain how an mnc’s translation exposure can be hedged. | Managing Economic Exposure And Translation Exposure 12 LECTURE Chapter Objectives To explain how an MNC’s economic exposure can be hedged; and To explain how an MNC’s translation exposure can be hedged. Economic exposure refers to the impact exchange rate fluctuations can have on a firm’s future cash flows. Recall that corporate cash flows can be affected by exchange rate movements in ways not directly associated with foreign transactions. Economic Exposure The economic impact of currency exchange rates on us is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, can cause us to adjust our financing and operating strategies. PepsiCo Economic Exposure Use of the Income Statement to Assess Economic Exposure An MNC can determine its exposure by assessing the sensitivity of its cash inflows and outflows to various possible exchange rate scenarios. The MNC can then . | Managing Economic Exposure And Translation Exposure 12 LECTURE Chapter Objectives To explain how an MNC’s economic exposure can be hedged; and To explain how an MNC’s translation exposure can be hedged. Economic exposure refers to the impact exchange rate fluctuations can have on a firm’s future cash flows. Recall that corporate cash flows can be affected by exchange rate movements in ways not directly associated with foreign transactions. Economic Exposure The economic impact of currency exchange rates on us is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, can cause us to adjust our financing and operating strategies. PepsiCo Economic Exposure Use of the Income Statement to Assess Economic Exposure An MNC can determine its exposure by assessing the sensitivity of its cash inflows and outflows to various possible exchange rate scenarios. The MNC can then reduce its exposure by restructuring its operations to balance its exchange-rate-sensitive cash flows. Note that computer spreadsheets are often used to expedite the analysis. Original Impact of Exchange Rate Movements on Earnings: Madison, Inc. (In Millions) Managing Madison Inc.’s Economic Exposure Madison’s earnings before taxes is inversely related to the Canadian dollar’s strength, since the higher expenses more than offset the higher revenue when the Canadian dollar strengthens. Madison may reduce its exposure by increasing Canadian sales, reducing orders of Canadian materials, and borrowing less in Canadian dollars. How Restructuring Can Reduce Economic Exposure Restructuring to reduce economic exposure involves shifting the sources of costs or revenue to other locations in order to match cash inflows and outflows in foreign currencies. The proposed structure is then evaluated by assessing the sensitivity of its cash inflows and outflows to various possible exchange rate scenarios. .

• Tài chính doanh nghiệp
• Multinational financial management
• Financial management
• Lecture Multinational financial management
• Management control
• Corporate control
• Multinational capital budgeting
• Capital structure
• Multinational cost of capital
• Multinational cost
• Capital budgeting analysis
• International project
• Costs of capital
• Country risk analysis
• Multinational corporation
• Capital budgeting
• International financial reporting standards
• Foreign exchange risk management
• International cash management
• Cash flow analysis
• Centralized cash management
• Lesson International financial management
• International financial management
• Globalization Multinational Firm
• The Multinational Firm
• Multinational Corporations
• Foreign Exchange Risk
• Quản lý tài chính
• Quản lý tài chính đa quốc gia
• Multinational finance
• Finance careers
• Optimizing cash flows
• Investing excess cash
• MNCs Financial Management
• Goals of MNC
• The rise of the MNCs
• Internationalization of Business
• Multinational Financial Management Theory
• Cash flows
• Multiple choice
• International equity markets
• Measures of liquidity
• Market structure