What is "Economic exposure," and how does it impact companies like Nestlé, Daimler AG, Royal Dutch Shell, and Astra Zeneca? Assess the impact of a weaker dollar on the financial performance of these corporations
What will be an ideal response?
Economic exposure refers to the impact of currency fluctuations on the present value of a company's expected future cash flows. Economic exposure is directly proportional to the amount of business a company conducts outside its home market. Nestlé, for example, has 98% of annual sales taking place outside of Switzerland and therefore faces critical economic or currency exposure. Similarly, Daimler AG, Royal Dutch Shell and Astra Zeneca generate over one-third of their sales from the United States. They are all in the Eurozone. If the dollar becomes weak relative to the euro, all of these companies will face economic exposure. On the other hand, U.S. companies will be less exposed compared to these companies.
You might also like to view...
The term used by lenders, "mortgage yield" best describes:
A: An increase in the value of a property which has a mortgage; B: The effective interest return obtained from a first trust deed by an investor; C: All of the money received by a lender after deducting closing costs and loan fees; D: What the lender receives when a mortgage is paid off.
In addition to an expression of gratitude, what is a typical element found at the end of a routine request?
A) An outline of alternative B) An indication of consequences if the request is not fulfilled C) An indication of how to reach the writer D) A call for action E) A reminder of reasons why the request should be granted