Chat with us, powered by LiveChat Global Dimnesions in Business | WriteDen

Global Dimnesions in Business

Order Instructions

Overview

Foreign exchange impacts the profitability of transactions in international markets. It can turn a profitable business into one that loses money and can turn an unprofitable business into one that makes money.

 

In this assignment, you will analyze the impact of foreign exchange on different business scenarios and present your findings in a short business memo.

 

Scenario

You manage the international business for a manufacturing company. You are responsible for the overall profitability of your business unit. Your company ships your products to Malaysia. The retail stores that buy your products there pay you in their local currency, the Malaysian ringgit (MYR). All sales for the first quarter are paid on April 1st and use the exchange rate at the close of business on April 1st or the first business day after April 1st if it falls on a Saturday or Sunday. The company has sales contracts with different vendors that determine the number of units sold well in advance. The company is contractually obligated to sell 4,000 units for exactly 1.25 million MYR for the first quarter. The break-even point for each unit is $90 in U.S. dollars. Use the following foreign exchange rates:

 

On January 1, the daily spot rate is 3.13 MYR, and the forward rate is 0.317 U.S. dollars/MYR for April 1st of the same year.

On April 1, the daily spot rate is 3.52 MYR.

Prompt

Using the information above, create a short business memo that explains the profitability, viability, and importance of considering foreign exchange on the basis of the scenarios below.

 

Scenario 1: The company uses the spot rate on April 1st to convert its sales revenue in MYR to U.S. dollars.

 

Scenario 2: On January 1st, the company uses that day’s forward rate today to lock in a foreign exchange rate for its expected 1.25 million MYR in sales. This means the company agreed to exchange 1.25 million MYR using the forward rate on January 1st when April 1 arrives.

 

Scenario 3: Another option for the company is to spend the foreign currency and avoid any currency exchange. Because it is a manufacturing company, raw materials are always needed.

 

Specifically, you must address the following rubric criteria:

 

Foreign Exchange Calculations: Determine the profitability of the international business by using foreign exchange calculations for the first and second scenarios.

Spend or Save: Discuss what you would need to consider when determining if the company should buy raw materials with the foreign currency in an effort to avoid foreign exchange risk and whether this is a viable option for the company.

Conclusion: After determining the result for each scenario, explain the importance to a company’s financial results of considering foreign exchange risk.

Guidelines for Submission

Submit this assignment as a 250- to 300-word Microsoft Word document. Sources should be cited according to APA style.

 

HOW OUR WEBSITE WORKS

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of 
HIGH QUALITY & PLAGIARISM FREE.

Step 1

To make an Order you only need to click ORDER NOW and we will direct you to our Order Page at WriteDen. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
 Deadline range from 6 hours to 30 days.

Step 2

Once done with writing your paper we will upload it to your account on our website and also forward a copy to your email.

Step 3
Upon receiving your paper, review it and if any changes are needed contact us immediately. We offer unlimited revisions at no extra cost.

Is it Safe to use our services?
We never resell papers on this site. Meaning after your purchase you will get an original copy of your assignment and you have all the rights to use the paper.

Discounts

Our price ranges from $8-$14 per page. If you are short of Budget, contact our Live Support for a Discount Code. All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.

Please note we do not have prewritten answers. We need some time to prepare a perfect essay for you.