Waiting for answer This question has not been answered yet. You can hire a professional tutor to get the answer.
Hello, I am looking for someone to write an essay on International Financial Management. It needs to be at least 2500 words.Sometimes, firms sell their products before they have met the cost of produc
Hello, I am looking for someone to write an essay on International Financial Management. It needs to be at least 2500 words.
Sometimes, firms sell their products before they have met the cost of production. For instance, an airline can sell its tickets while the cost of buying fuel is at a certain point, yet due to change in dollar exchange rates, this can increase the cost of fuel, which would lead to losses or minimized profits. If the change is significant enough, the results will be a loss.
Slow Nourish plc faces the same kind of problem. This is because the firm buys its merchandise using one type of currency and sells the same using another currency. What makes the risk of currency for the firm even more serious is the fact that the profit margin is so low (3%) that if a small change in currency was to happen in unfavorable way, the firm would lose its profits and maybe even make losses. The other issue is the fact that most of the goods that the firm buys are highly perishable. This means that if the currency rates were to be changed, the firm would not be able to hold its stock until such a time when the currency rates are fair. This exposes the business to currency risks in two major ways.
Mr. Brick, the Estates Director argued that the IMF should be able to help in making sure that the exchange rates did not change too much as to affect the global payment systems. His argument was that IMF, in accordance with its mandate as stipulated in the Bretton Woods Conference of 1944, should be able to monitor and control the world payment system to avoid big changes in the exchange rates. While Mr. Brick’s argument was valid on principle, Mr. Cheap, the purchasing director argues that this was not possible in practice due to the fact that the American dollar, which has come to be a major currency pegging for world currency, is not in good condition due to poor balance of payment issues. However, Mrs. Innocent, the legal secretary said that, although the exchange rates were seen to shift greatly over short periods of