based on the profotability of the foreign exchange calculations:

explain the importance to a companied results on considering foreign exchange risk

BASE ANSWER FROM THE PICTURE!!!

Scenario 1: The company uses the spot rate on April 1st to convert its sales revenue in MYR to U.S. dollars. Profitability =$41250 The txn is fully functional. To avoid loss due to forgein exchange risk, it is critical to consider and hedge forgein exchange risk. On January 1, the forward rate was $0.317/MYR. On April 1, the spot rate was MYR3.52/ $=1/3.52=$0.284/MYR. On January 1, the company entered into a forward contract to sell 1.25 millioni MYR at \$0.317 per MYR on April 1. On April 1, the spot rate is $0.284/MYR, which is lower than the Forward rate used by the company on January 1. Explanation Scenario 1: The company uses the spot rate on April 1st to convert its sales revenue in MYR to U.S. dollars. Step 2/2 Profitability =(Forward rate used-Spot rate on april 1)*1,250,000 MYR =($0.317/ MYR-S0.284/MYR 1,250,000 MYR =($0.033/ MYR )1,250,000 =$41,250 Viability - The currency rate (\$0.317/MYR) to sell MYR on April 1 has been locked in since the company entered the forward contract on January 1 to sell MYR on April 1. The transaction is entirely feasible. It can get the exchange rate of ( $0.317/MYR ) on April 1st, regardless of what the real spot rate is on that day