1. Assume it is April 1st 2006. Based on the case, build a compelling case for buying or selling JPYUSD Analysis of the Current situation During the first half of the decade of the 2000’s, the USD had appreciated. In 2005, the USD went against all predictions of the prognosticators and rose. Despite a terrible current account deficit (USD800), the USD is heading towards a 140 JPY/USD level.
(a) A tilt of spending towards nontraded products causes the real exchange rate to appreciate as the price of nontraded goods relative to traded goods rises (the real exchange rate can be expressed as the price of tradables to the price of nontradables). (b) A shift in foreign demand towards domestic exports causes an excess demand for the domestic country’s goods which causes the relative price of these goods to rise; that is, it
If the rate moved above or below the announced band, the Central Bank would intervene on its behalf. From 1995 to 1998, Russian borrowers – both government and non-governmental – had borrowed large amounts in international capital markets. This external debt, which denominated in U.S. dollars and was estimated at $160 billion by 1998, required U.S. dollars for interest and principal repayments. Unfortunately, the U.S. dollars that Russia was earning on its trade and current account surpluses were leaving the country in the form of capital flight and thus were not available to service this growing external debt. In addition, a global fall in commodity prices, adversely affected Russia’s dollar earnings on exports of oil, timber, and gold.
During 2004, the situation got worse and the assets had gone down to 48.5%. Lucent’s cash and cash equivalents went down from 24% of their entire assets in 2003 to almost 20% in 2004. Lucent’s inventories, however, came up from 4.0% in 2003 to 4.8% in 2004, this is about a 20 percent increase in the total inventory. Lucent Technologies had a quite significant drop of their debt structure between the years of 2003 and 2004. While the current liability dropped from 25.6% in 2003 to 24.3% in 2004, it is apparent that this company has allocated for this as a long-term debt since it rose from 23% of total liabilities in 2003 to 26.4% in 2004.
Unfortunately, investors around the world expected that the value of Volkswagen would decline given the state of the world economy in 2008, and these Investors had short sold 12.8% of Volkswagen shares. In their frenzy to cover their short positions in the wake of Porsche’s announcement, the price of Volkswagen shares increased dramatically. Porsche made over $6B in the ruse while hedge funds lost an estimated $35B. In the second
The accounts receivable turnover decreased from 135.4 in 1984 to 53.9 in 1987 while the age of accounts receivable increased from 2.7 days in 1984 to 6.8 days in 1987 indicate that Crazy Eddie had some problems on realizing accounts receivable. In terms of cash and short-term investments, the cash and restricted cash account for 44.8 percent in 1985 and 3.2 percent in 1987. This change was related to the short-term investments, a drastically increase occurred from zero to 41.4 percent in 1987. This might resulted from the big explosion of opening branches. The convertible subordinated debentures increased
It is clear that some nations in the EU, namely Greece, Portugal and Spain have been living beyond their means for years, running deficits that are far too high, as well as neglecting their duties to not involve other nations in their debt issues. The big danger in fiscal consolidation is that it creates a downward, where falling demand and employment trigger declining tax revenues and budget deficits actually get worse instead of better. Further spending cuts or tax increases only worsen the downward spiral. A reduction in government spending and increase in taxes are withdrawals from the circular flow of income. This reduction in AD causes mass unemployment which could bring about deflation and interest rates will need to rise to control this.
I. Market Ratios: First of all, looking at the market ratios, we can see an unstable performance of the company between June 2008 and March 2010. The stock price is about half of the industry’s average stock prices. Both of them fell dramatically in December 2008 and March 2009, but they went up and have had an upward trend until now. Below is the price chart of Garmin from June 2008 to March 2010: (Source: Msn Moneycentral) The company pays an annual dividend of 0.750, which is much higher than the industry’s average.
Current macroeconomic issues 2.1 Steady growth GDP can be seen as “the total annual output of goods and services on which aggregate demand is spent” (Sloman, 2008, p.277); it can be calculated as the sum of consumer spending, investments, government spending and balance of import and export. 2.1.1 Current issue UK has a fluctuant GDP since 2009. There is both positive and negative growth in the recent years (Trading Economics, 2013). GDP of UK shrank by 0.3% at the end of 2012, which is mainly attributed to drop in mining and quarrying industry, after maintenance delays at North Sea oil field. Manufacturing is another sector that causes the negative growth in GDP; it has decreased by 1.5% than the year before.
Another factor is inflation. Inflation changes from year to year and affects more and more the customer. If in 2000 with 100£ you bought 100kg of sugar, now in 2011 you can buy only 50kg of sugar. The economic growth can affect your company in a bad manner or in a good manner. For example, now we deal with a crisis period and large companies like Sainsbury suffer a lot.