Required:
A. Introduction
-What is the global reach of the corporation? Detail the number of overseas subsidiaries, the geographic breakdown of sales, assets and income, and their involvement in international trade.
B. What is the company's Foreign Exchange (FX) Risk Management Policy?
-Is centralized or decentralized?
o Head Office, Regional Offices, or Operating Subsidiaries
-What types of exposure are measured and managed?
o Translation, Transaction and Economic or Operating Exposure
-How has "Other Comprehensive Income", an equity account, changed in recent years?
-What hedging transactions are used for each type of exposure?
o Forward Contracts, Futures, Options and Swaps
o Cash Flow, Fair Value and Net Investment Hedges
-How long a time frame is used to manage this risk?
o One year, several years etc.
C. How does the company use derivatives for funding, investing, and other price risks?
D. What is the extent of the company's offshore and Euromarket funding and investing activities?
E. Conclusion: How effective is this firm's international financial strategy? How have they created value with it? How have they destroyed value with it? What do you believe will be the future result of continuing to follow this strategy?