Question
You are the senior accountant for a business that regularly imports spare parts for a range of your products from overseas suppliers. You have been
You are the senior accountant for a business that regularly imports spare parts for a range of your products from overseas suppliers. You have been instructed by the CEO to look at ways you can save money on the transactions when you pay these overseas suppliers. He is con- vinced that there are ways in which you can organize the transaction so that you maximize the opportunities with fluctuating exchange rates. He has been reading about spot rates and is a little confused about the way it works or whether it is strictly legal or ethical. He wants you to explain the processes involved in organizing forward rates and how the business can take advantage of them. 9-5. When we pay an overseas supplier, should we wait until the last minute to pay? 9-6. How far in advance can we organize these forward contracts? Is the timing of the arrangement crucial?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started