A US multinational company is required to report its financial results in US dollars. How does this create currency exchange risk for the company? What is the term which most accurately describes this particular risk? a. Currency risk- if unexpected changes in currency values affect the value of the firm 4.
How does Net Sales change during these three years? What could be the reason for the change in Net Sales in 2011? According to the Risk factors mentioned in the Financial Statements, factors such as current economic conditions, timing of new merchandise releases and promotional events, changes in merchandise mix, success of marketing programs, and weather conditions are the main factors that affect sales in a company such as The Gap Inc. 4. What was the change of Retained Earnings from the year 2010 to 2011? Retained earnings increase by $597.00 they raised from $11,767.00 to $12,364.00, an increase approximately of 5.07% And what was the Net Income for the year 2011?
Document 2 [Tomas de Mercado] shows that the ballast stones used in the ships on the outgoing trip were replaced by silver during their return trips; while document 6 [Antonio Vazquez de Espinos] claims that from 1545 to 1624 a total of approximately 326,000,000 silver coins were taken out of the mines in Potosi. These documents show that during this time there was an excessive amount of silver found and it drastically affected the economy in Spain. “High prices ruined Spain as the prices attracted Asian commodities and the silver currency flowed out to pay for them.” (de Mercado) Just because there was silver flowing into
The Sovereign Debt Crisis is still ongoing having recently extended itself into calendar year 2013. By its very nature, a model of the recurrence of the business cycle affecting the market economy does not allow for a boom without a bust. However, of credit bubbles and financial crises, also cyclical phenomena, a financial crisis need not always follow a credit bubble though a credit bubble has always preceded a financial crisis. Robert Aliber writes, ‘the thesis of the book is that the cycle of manias and panics results from pro-cyclical changes in the supply of credit; the credit supply increases rapidly in good times, and then when economic growth slackens, the rate of growth of credit has often declined sharply” (p.13). Credit bubbles
In Australia’s economy, there are many domestic and global changes impacting aspects of our economy such as the exchange rate. The exchange rate is the price of an economies currency in relation to another currency. Australia’s currency is determined by the concept of market forces of supply and demand meaning changed in the domestic and global economy will impact the exchange rate dramatically. Domestic influences such as competitiveness of Australian industries and Reserve Bank of Australia intervention will assist in the determination of Australia’s exchange rate. Also international influences such as financial flows into Australia by foreign investors will directly adjust our exchange rates.
The events leading to this notable and heavily debated “bailout” are varied and disputable. Beginning in mid 2008 there were several important indicators worldwide foretelling a likely economic crisis. Some indicators included high oil prices, which led to both high food prices (due to a dependence of food production on petroleum and using food crop products such as ethanol and bio-diesel as an alternative to petroleum), global inflation, a substantial credit crisis leading to the bankruptcy of large and well established investment and commercial banks in various nations around the world, increased unemployment, and the possibility of a global recession. [4] Furthermore, the United States entered 2008 during a housing market depression, a sub-prime mortgage crisis, and a declining dollar value. In February 63,000 jobs were lost (a 5-year record) and in September 159,000 jobs were lost, bringing the monthly average to 84,000 per month from January to September of 2008.
(CIA World Factbook, 2013). Foreign investment has played an important part on Mexico’s growing economy. The study of MXN against USD for a period of 5 years (year 2006 to year 2010) reveals that foreign investors are ready to back out from their investment in international markets as soon as they sense obstacles emerging. The foreign investors still do not trust fully in the stability of emerging markets. Mexico is 12th biggest economic power in the world in purchase parity terms.
The mandated tax adds uncertainty to profit projections for the base metals product division of the company. Economic Factors • BHP Billiton is susceptible to the economic factors of inflation in energy costs, exploration expenses, labour costs, operations costs, materials costs. These increases could adversely impact the company expansion plans, development projects and company profitability. Any major weakness in global economies could cause a fall off in commodities demand resulting in increased supply and reduced prices which could impact company profitability.BHP Billiton is heavily dependent on the China economy for 16.8% of company revenue ($6.6b). China global demand for commodities accounts for 41% of seaborne iron ore, 22% of copper, 22% of aluminum and 16% of nickel demand.
1.1.2 Inflation Rate: The inflation rate’s trend can be used as an indicator to forecast the future price level and to set future sales price. Inflation was strongly fluctuating through 1991 to 1994, and became more stable after 1995. The inflation rate between 1% and 2% is healthy for economics growth. However, the projection for the North America’s inflation rate is 3% - 5% in the coming years. In order to protect the exchange rate between Canada coins and US dollars, Bank of Canada has to increase the interest rate as a response to US Fed.
Over the past two decades, Argentina has faced a lot of changes in the economic and social sector. In the 1980’s, when Argentina was going through major structural adjustments and going back to the populist regime, income inequality among households was affected by growing unemployment due to past crises. This was reflected on the loss of jobs of a big part of low-income groups and in the increase in differential wages between the rich and the poor. In the late 1980’s, another economical crisis hit the country and it drove it to the hyperinflation period, where the biggest jump to inequality occurred. The 90’s reform brought a restructuring labor system, which only increased even more the unemployment rate and the gap between the high-skilled population and the majority: the unskilled.