Chapter 6 HW Markova

Chapter 6 HW Markova - 1 MNC Assignment Foreign Currency...

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1 MNC Assignment Foreign Currency Risk - Apple According to Apple’s annual report and considering its multinational operations, the company is subject to foreign currency exchange risk, since it receives multiple currencies other than the U.S. dollar. Accordingly, as Apple points out, changes in exchange rates, and in particular a strengthening of the U.S. dollar, will negatively affect the company’s net sales and gross margins as expressed in U.S. dollars. In addition, there is also a risk that the company will have to adjust local currency product pricing due to competitive pressures when there has been significant volatility in foreign currency exchange rates. Based on the annual report, Apple adequately recognizes the risks associated with the foreign currency exchange rates and effectively uses hedging in order to offset those risks. As the report states, the company may enter into foreign currency forward and option contracts with financial institutions in order to protect against foreign exchange
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This note was uploaded on 10/07/2011 for the course ACCOUNTING 4220 taught by Professor Brown during the Spring '11 term at UMBC.

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Chapter 6 HW Markova - 1 MNC Assignment Foreign Currency...

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