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Evaluate the foreign exchange exposure aspects of the French retail investment project on behalf of Archer's Organic Foods plc - Essay Example

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Evaluate the foreign exchange exposure aspects of the French retail investment project on behalf of Archer's Organic Foods plc

.................................4 4.0 Conclusion ……………………………………………......….................................9 5.0 Recommendations............................................................................................9 References………………………………………………………………………….……..10 Appendices ………………………………………………………………………….....….10 Abstract Without a doubt, the issue of foreign exchange exposures through loss of economic value leads to high losses in firms’ value as the management seeks to maximize the profitability, net cash flow and market value of the firm. More significantly, foreign exchange rates get exposures to translation, transaction, and economic exposures depending on the market prevalent exchange rates in the foreign exchange market. With the existence of increased exchange exposure risks among companies that operate globally, different current and uprising fluctuations in the foreign exchange rates influence its growth (Allayannis and Ofek, 2001). As a result, most companies’ analysts undertake a thorough analysis of the foreign exchange markets, which reflects the increased significance of monitoring the effects of the fluctuating exchange rate as it affects individual firms’ profitability levels. ...
ds plc management is interested in undertaking investment decisions that will increase its profitability levels, thus avoiding any losses that might arise from its expansion to France due to increased risks of foreign exchange exposures. Considering the market sensitivity to exchange rate exposures, it is radical to undertake a decision based on foreign exchange exposures that are more likely to occur in terms of a regression of asset value on the exchange rate. As a company considering undertaking investment projects that will increase their profitability levels, the management of Archer’s Organic Foods plc should consider the increased possibility of accounting, operation and strategic exposures that could arise from increased foreign exchange rate fluctuations. More significantly, the possibility of increased volatility of the financial markets as Archer’s Organic Foods plc seeks to undertake increased expansion growth allows for unexpected movements in exchange rates and interest rates within the different foreign markets (Elliott, Huffman and Makar, 2003). More importantly, the increased free movements of cash flows and profits generated from trading with France increases the likelihood of foreign exchange exposures. With the growing global competition, the increased likelihood of foreign exchange exposures through increased unanticipated movements with the foreign currency trading can cause very large gains or losses if the risks remain largely uncontrolled. As a result, the company’s management should seek to undertake increased measures through increased use of foreign currency derivatives and other hedging instruments that are more likely to mitigate the risk of foreign exchange losses affecting the firm’s asset value. Foreign Exchange Rate Exposures ...Show more

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Archer's Organic Foods Plc Name Here Name of Institution Date Class Name Date Table of Contents Table of Contents…………………………………………………………………….2 1.0 Abstract ……
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Evaluate the foreign exchange exposure aspects of the French retail investment project on behalf of Archers Organic Foods plc essay example
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