Evaluate the foreign exchange exposure aspects of the French retail Essay

Evaluate the distant transpose exposure aspects of the French retail investing project on behalf of Archers Organic Foods plc - Essay Example.................................4 4.0 Conclusion .......................................9 5.0 Recommendations............................................................................................9 References...10 Appendices ......10 Abstract Without a doubt, the issue of irrelevant replacement 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. much significantly, exotic 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 increase exchange exposure seeks among companies that operate globally, variant 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 change magnitude significance of monitoring the effects of the fluctuating exchange rate as it affects individual firms profitability levels. ... ds plc management is interested in undertaking coronation decisions that will increase its profitability levels, thus avoiding any losses that might arise from its expansion to France delinquent 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 play along numbering undertaking investment projects that will increase their profitability levels, the management of Archers Organic Foods plc should consider the increased possibility of accounting, operation a nd strategic exposures that could arise from increased foreign exchange rate fluctuations. More significantly, the possibility of increased volatility of the financial markets as Archers 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 generally uncontrolled. As a result, the companys management should seek to undertake increased measures through increased use of foreign currency derivatives and other hedging instruments that are more likely to mi tigate the risk of foreign exchange losses affecting the firms asset value. Foreign Exchange put Exposures