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Pages:
1 page/β‰ˆ275 words
Sources:
3 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 4.68
Topic:

Amazon and Foreign Exchange Exposures

Essay Instructions:

This will be written about Amazon. The 3 types of exposures are listed below.
A multinational corporation is subject to foreign exchange exposures. Exposures are the result of foreign exchange rates changing. Based on the three types of exposures mentioned in the textbook, which financial instruments would you recommend for the multinational corporation you are advising in your final project? Why? Make sure to indicate which multinational corporation you selected.
-Transaction exposure - measures changes in the value of outstanding financial obligations incurred prior to a change in exchange rates but not due to be settled until after the exchange rates change. Thus, it deals with changes in cash flows that result from existing contractual obligations.
- Translation exposure - is the potential for accounting-derived changes in owner's equity or consolidated income to occur because of the need to "translate" foreign currency financial statements of foreign subsidiaries into a single reporting currency to prepare worldwide consolidated financial statements.
-Operating exposure - also commonly called economic exposure or competitive - exposure measures the change in the present value of the firm resulting from any change in future operating cash flows of the firm caused by an unexpected change in exchange rates. The change in value depends on the effect of the exchange rate change on future sales volume, prices, and costs.

Essay Sample Content Preview:

Amazon and Exposures
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Amazon and Exposures
Amazon is one of the largest international corporations and is heavily aligned with foreign exchange exposure. Before understanding the key financial instruments for the company, it is necessary to note its operations. Amazon is a multinational company located in the United States and offers vital services and products, including artificial intelligence, digital streaming, computing, and e-commerce (Amazon, 2022). It plays a crucial role in strengthening the global economy due to its unique and differentiated valuable brands. It is a company that has grown heavily since 1994 due to foreign exchange exposures, and offering reliable advice for effective financial instruments would enhance its growth.
The three exposures, including operation, translation, and transaction exposure, provide a reliable background for understanding the necessary financial instruments for Amazon. Amazon is an eCommerce company that heavily relies on transaction exposure which is essential since it determines the outstanding financial obligations (Aggarwal & Harper, 2010). Amazon operates in differe...
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