ICI Presso - Risk Management StephanieAvakian SwapnilGupta...

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Risk  Management Reducing  exposure to  financial and  operating  Stephanie Avakian Swapnil Gupta Hans Opsahl Venkateswara Seelam
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Strategies Transfer receivables Outsource extended warranties
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Summary: Transfer  receivables Sell 9/10ths of receivables 10% of future interest income Recourse obligation
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Value Proposition Get immediate liquidity Lose small part of profit Reduce exposure to credit risk 
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Accounting Issues GAAP vs IFRS True sale or secured borrowing Mark receivables to market Contingent liability of recourse obligation No gains or losses on transaction
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RECEIVABLES ( GAAP )           DOES IT MEET THE CONDITIONS? 1. Transferred Assets Isolated from Transferor 2. Transferee Has Right to Pledge or Sell Assets 3. Transferor Does Not Maintain Control Through Repurchase Agreement Record as a Liability Is There Continuing Involvement? - Record the gain/loss on sale
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ICI Presso - Risk Management StephanieAvakian SwapnilGupta...

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