Discussion 1: Multinational Financial Management
A. Using the company that you selected for Assignment 1, review its Form 10K report and identify risks that it considers to be associated with its international operations (this information is normally reported in Section 1A of the company’s Form 10K report? Which three risks, in your judgment, are the most important and what should the company do about them? (Note: If the company you selected does not have international operations, select another company that does have international operations for this analysis; some examples are KO, PEP, MSFT, GE, MKC, etc).
B. For the company that you selected for Assignment 1, or the company you examined for Question A above, review the company’s most recent Form 10K report and answer the following questions:
1. To what extent has the firm’s financial results been affected by foreign currency adjustments in each of the past three years and are these adjustments significant?
2. Why did the adjustments occur (Hint: Examine Section 1A of the Form 10K report and the Notes to the Financial Statements)?
3. If you were the chief financial officer of the company, what actions might you take to manage the foreign currency exposures of the company and why?