Final Project Milestone Two Spreadsheet: Foreign Currency Impact
Step 1) Pull annual financial statements for your selected multinational firm for the last three years. Find overall company rev
Step 2) Pull the yearly average exchange rate between USD and each subsidiary's currency. To find historical data, go to http:
Step 3) Go to http://www.xe.com/currencytables/.
Select December 31 and use it as the average yearly exchange rate for the year (not exactly correct, but average yearly rate r
Step 4) Calculate the impacts of the subsidiary revenue on the overall and company revenue.
Step 5) Calculate Scenario #1: Appreciate Dollar by 5%. What would happen to revenue from the subsidiary—would it increas
Step 6) Calculate Scenario #2: Depreciate Dollar by 5%. What would happen to revenue from the subsidiary—would it increas
Note: Although the spreadsheet is set up for three subsidiaries, your company might only have one, which is fine. More than
STEP 1: REVENUE TABLE
STEP 3: CALCULATE IMPACTS
201#
201#
STEP 2: AVERAGE YEARLY EXCHANGE RATE
201#
201#
201#
YEAR
201#
201#
201#
Overall Company Revenue
Subsidiary 1 Revenue
Subsidiary 2 Revenue
Subsidiary 3 Revenue
YEAR
201#
USD
Subsidiary 1
Local Curr
Appreciate Dollar Currency 5%
YEAR
201#
201#
201#
Appreciate Dollar Currency 5%
YEAR
201#
201#
201#
mpact
rs. Find overall company revenue and revenue for the subsidiary you have chosen to analyze.
d historical data, go to http://www.xe.com/currencytables/.
ct, but average yearly rate requires extra payment).
subsidiary—would it increase in USD terms or decrease in USD?
subsidiary—would it increase in USD terms or decrease in USD?
ne, which is fine. More than one is better, but the maximum should be three.
TEP 3: CALCULATE IMPACTS OF SUBSIDIARY REVENUE ON TOTAL REVENUE
Overall
Subsidiary 1 Rev Subsidiary 1 Rev
Revenue in
in Local Curr
in USD
USD
% of Subsidiary
% of Subsidiary
Revenue From Subsidiary 2 Rev Subsidiary 2 Rev Revenue From
Total Revenue
in Local Curr
in USD
Total Revenue
(USD)
(USD)
STEP 4: Scenario #1—Dollar Appreciates 5%
ppreciate Dollar Currency 5%. What would happen to revenue from the subsidiary—would it incrase in USD terms or decrease in USD?
Overall
Subsidiary 1 Rev
Subsidiary 1 Rev
Revenue in
in USD After 5%
in Local Curr
USD
Appreciation
% of Subsidiary
% of Subsidiary
Subsidiary 2 Rev
Revenue From Subsidiary 2 Rev
Revenue From
in USD After 5%
Total Revenue
in Local Curr
Total Revenue
Appreciation
(USD)
(USD)
STEP 5: Scenario #2—Dollar Depreciates 5%
ppreciate Dollar Currency 5%. What would happen to revenue from the subsidiary—would it incrase in USD terms or decrease in USD?
Overall
Subsidiary 1 Rev
Subsidiary 1 Rev
Revenue in
in USD After 5%
in Local Curr
USD
Depreciation
% of subsidiary
% of subsidiary
Subsidiary 2 Rev
revenue from Subsidiary 2 Rev
revenue from
in USD After 5%
Total Revenue
in Local Curr
Total Revenue
Depreciation
(USD)
(USD)
Subsidiary 3
Rev in Local
Curr
Subsidiary 3 Rev
in USD
% of Subsidiary
Revenue From
Total Revenue
(USD)
Subsidiary 3 Rev
in USD After 5%
Appreciation
% of Subsidiary
Revenue From
Total Revenue
(USD)
Subsidiary 3 Rev
in USD after 5%
Depreciation
% of Subsidiary
Revenue From
Total Revenue
(USD)
rms or decrease in USD?
Subsidiary 3
Rev in Local
Curr
rms or decrease in USD?
Subsidiary 3
Rev in Local
Curr
INT 620 Milestone Two Guidelines and Rubric: Risk Mitigation Strategies
Overview: For this milestone, due in Module Five, you will analyze risk mitigation strategies for your selected company. Additionally, you will calculate the
impacts foreign currencies have on the overall revenue and profit structure of your selected company.
Prompt: First, review the annual financial statements (Form 10-K) for your selected company. You can either retrieve the statements from the webpage SEC
EDGAR Company Filings or directly from the company’s website, often listed under “Investor Information.” Review the Module Five resources, including the
website Historical Exchange Rates, and review the Module Three and Four resources.
Next, complete the spreadsheet Milestone Two: Foreign Currency Impact, which analyzes the foreign currency impact on your selected company. To complete
this part of the milestone, you will need to review at least three years’ worth of annual financial reports.
Finally, complete the Final Project Milestone Two section in the Final Project Template. The paper should outline what hedging techniques your selected
company is currently using. You need to research the annual statement and look for foreign currencies and their treatment, the derivative contract specifically
used for hedging, and any other notes on hedging in the company’s annual financial statements. Further, you will need to analyze specific foreign currency
transactions listed in the financial statements.
The following critical elements must be addressed:
Section 2: Risk Mitigation Strategies
A. Determine current financial and strategic impacts of international risks to inform risk mitigation strategies. In other words, what kind of risks is
your company exposed to (translation, transaction, economic, operating, etc.) and why?
B. Explain how to mitigate foreign exchange rate risk.
C. Identify the tools the company is currently using to mitigate its foreign exchange risk. This should be done using the annual financial
statements.
D. Calculate the financial impacts of international foreign exchange risk to inform risk mitigation strategies. This will be done in an Excel
spreadsheet. There are instructions in the spreadsheet to guide you step-by-step through the exercise.
E. Propose future mitigation strategies based on the prospective market for your corporation including addressing risks that are not currently
being efficiently mitigated for your corporation.
Be sure to reference your completed Final Project Milestone One document as well as any other pertinent course resources to support your responses.
Incorporate instructor feedback on this milestone into your final project submission.
Rubric
Guidelines for Submission: This milestone should be submitted as a Word document, 2–3 pages in length, double-spaced, using 12-point Times New Roman
font, one-inch margins, and the latest edition of the APA manual for formatting and citations.
Critical Elements
Section 2: Current Impacts
Proficient (100%)
Determines current financial and strategic
impacts of international risks to inform risk
mitigation strategies
Needs Improvement (70%)
Determines current financial and strategic
impacts of international risks to inform risk
mitigation strategies but is missing key ideas
Section 2: Mitigate Foreign
Exchange Rate Risk
Explains how to mitigate foreign exchange
rate risk
Section 2: Tools
Defends the tools the company is currently
using to mitigate foreign exchange risk
Section 2: Financial
Impacts
Analyzes financial impacts of international
foreign exchange risk to support risk
mitigation strategies
Section 2: Future
Mitigation Strategies
Proposes future mitigation strategies based
on the prospective market for the
corporation including addressing risks that
are not currently being efficiently mitigated
for the corporation
Submission has no major errors related to
citations, grammar, spelling, syntax, or
organization
Explains how to mitigate foreign exchange
rate risk but explanation is incomplete or
unclear
Defends the tools the company is currently
using to mitigate foreign exchange risk but
reasons provided are minor, incomplete, or
unclear
Analyzes financial impacts of international
foreign exchange risk to support risk
mitigation strategies in a way that is
incomplete or unclear
Proposes future mitigation strategies based
on the prospective market for the corporation
but proposal does not include risks that are
not currently efficiently mitigated
Articulation of Response
Submission has major errors related to
citations, grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main ideas
Not Evident (0%)
Does not determine current
financial and strategic impacts of
international risks to inform risk
mitigation strategies
Does not explain how to mitigate
foreign exchange rate risk
Value
18
18
Does not defend the tools the
company is currently using to
mitigate foreign exchange risk
18
Does not analyze financial impacts
of international foreign exchange
risk to support risk mitigation
strategies
Does not propose future mitigation
strategies based on the prospective
market for the corporation
18
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization that
prevent understanding of ideas
Total
10
18
100%
Global Expansion Proposal
INT 620 Final Project
1
Contents
Final Project Milestone One (Module Three) .................................................................................. 3
Introduction: Company Proposal and Background...................................................................... 3
Introduction: Subsidiary Expansion ............................................................................................ 3
Broad Strokes of the Expansion Plan: Microeconomic and Macroeconomic Factors in
Domestic Market ......................................................................................................................... 3
Broad Strokes of the Expansion Plan: Microeconomic and Macroeconomic Factors in
Prospective Global Market .......................................................................................................... 3
Broad Strokes of the Expansion Plan: Exchange Rate Regime in Domestic and Prospective
Global Markets ............................................................................................................................ 4
Broad Strokes of the Expansion Plan: Impacts of Economic Factors on Exchange Rates .......... 5
Broad Strokes of the Expansion Plan: Financial Impacts of Exchange Rate Movements on a
Corporation .................................................................................................................................. 5
Broad Strokes of the Expansion Plan: Main Risks and Main Benefits of the Proposed
Expansion .................................................................................................................................... 6
Final Project Milestone Two (Module Five) ................................................................................... 7
Risk Mitigation Strategies: Current Financial and Strategic Impacts of International Risks ...... 7
Risk Mitigation Strategies: Mitigating Foreign Exchange Rate Risk and Justifying Tools ........ 7
Risk Mitigation Strategies: Analyze Financial Impacts of Foreign Exchange Risks to Inform
Risk Mitigation Strategies ........................................................................................................... 7
Risk Mitigation Strategies: Future Mitigation Strategies Based on Prospective Market ............ 7
Final Project Milestone Three (Module Seven)............................................................................... 8
Global Expansion Financing: Capital Structure .......................................................................... 8
Global Expansion Financing: Funding ........................................................................................ 8
Global Expansion Financing: Financing ..................................................................................... 8
Final Project Submission (Module Nine) ........................................................................................ 9
Repatriation of Funds .................................................................................................................. 9
Executive Summary ..................................................................................................................... 9
References...................................................................................................................................... 10
Appendix........................................................................................................................................ 11
INT 620 Final Project
2
Note: Throughout this template, the items that are enclosed in angle brackets have been provided
to guide your responses. In your submissions, please delete these items. Remember to update the
title page and the footer.
Final Project Milestone One (Module Three)
Introduction: Company Proposal and Background
Introduction: Subsidiary Expansion
Broad Strokes of the Expansion Plan: Microeconomic and Macroeconomic Factors in
Domestic Market
Broad Strokes of the Expansion Plan: Microeconomic and Macroeconomic Factors in
Prospective Global Market
Macroeconomics
Microeconomics
Big picture: Macroeconomics is concerned
Little picture: Microeconomics is concerned
with how the overall economy works. The
with how supply and demand interact in
government is a major object of analysis in
individual markets for goods and services.
macroeconomics.
The foundation of macroeconomics is
Microeconomics consists of individual
microeconomics, for example, how all
entities, for example, whether price rises in
markets interact to generate big phenomena
the automobile or oil industries are driven by
that economists call aggregate variables.
supply or demand changes.
Output and income (GDP), unemployment,
Preference relations, supply and demand,
inflation and deflation.
opportunity cost.
Used to determine an economy’s overall
Used to determine methods of improvement
health, standard of living, and needs for
for individual business entities.
improvement.
Reference: http://www.imf.org/external/pubs/ft/fandd/basics/bigsmall.htm
Broad Strokes of the Expansion Plan: Exchange Rate Regime in Domestic and Prospective
Global Markets
INT 620 Final Project
4
Broad Strokes of the Expansion Plan: Impacts of Economic Factors on Exchange Rates
Broad Strokes of the Expansion Plan: Financial Impacts of Exchange Rate Movements on a
Corporation
INT 620 Final Project
5
Broad Strokes of the Expansion Plan: Main Risks and Main Benefits of the Proposed
Expansion
INT 620 Final Project
6
Final Project Milestone Two (Module Five)
Risk Mitigation Strategies: Current Financial and Strategic Impacts of International Risks
Risk Mitigation Strategies: Mitigating Foreign Exchange Rate Risk and Justifying Tools
Risk Mitigation Strategies: Analyze Financial Impacts of Foreign Exchange Risks to
Inform Risk Mitigation Strategies
Risk Mitigation Strategies: Future Mitigation Strategies Based on Prospective Market
INT 620 Final Project
7
Final Project Milestone Three (Module Seven)
Global Expansion Financing: Capital Structure
Global Expansion Financing: Funding
Global Expansion Financing: Financing
INT 620 Final Project
8
Final Project Submission (Module Nine)
Repatriation of Funds
Executive Summary
INT 620 Final Project
9
References
INT 620 Final Project
10
Appendix
INT 620 Final Project
11
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