Assignment:
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Obtain the annual report of a multinational corporation (MNC) that interests you. Use the annual report and other information you may gather to report on the following
Summarize any comments made in the annual report about
- the MNC's level of international operations (sales, production, purchases, etc.)
- the MNC's plans to expand overseas in the future
- the impact of the MNC's foreign business on its recent performance.
Summarize how the MNC was affected by recent changes in the U.S. dollar's value. Explain why the MNC was favorably or unfavorably affected by the dollar's recent movement. Look for any comments in the report that describe the MNC's transaction exposure or economic exposure. Summarize the MNC's translation exposure and the effect of the dollar's recent movements on consolidated earnings. In what ways does the MNC hedge its foreign exchange risk exposure?
Summarize why the MNC has increased its international operations over time. Determine which factors were most influential in motivating the MNC's expansion into other countries. Has the MNC engaged in strategic alliances to accomplish this growth? If so, what forms has it used and what motivations are apparent?
Where does the MNC obtain the financing (both long-term and short-term) it needs to fund its operations? Has it issued any bonds denominated in foreign currencies? Does the MNC generate cash flows in that currency that could be used to cover the annual payments? (Give your opinion if this is not clear from the annual report.) Summarize any statements made regarding the MNC's decision to finance with U.S. dollars versus foreign currencies.
Summarize the forms of political risk that the MNC is exposed to according to the annual report.
Does it appear that the MNC has benefited from its international operations? Explain.