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  • Economic Exposure

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    Bhuvan Gondal
    70 visualizzazioni2 pagine
    Economic exposure refers to the effect unexpected currency rate fluctuations have on a company's cash flows. It is long term in nature and can substantially impact a company's market value. A company's economic exposure is higher when both its product prices and input costs are sensitive to currency movements and it does not adapt its markets, products, or sourcing in response to currency changes. Lower economic exposure results when costs and prices are less sensitive to currency fluctuations and a company demonstrates flexibility in adapting to currency rate movements.

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    Eco Expo

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    Economic exposure refers to the effect unexpected currency rate fluctuations have on a company's cash flows. It is long term in nature and can substantially impact a company's market value. A company's economic exposure is higher when both its product prices and input costs are sensitive to currency movements and it does not adapt its markets, products, or sourcing in response to currency changes. Lower economic exposure results when costs and prices are less sensitive to currency fluctuations and a company demonstrates flexibility in adapting to currency rate movements.

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    70 visualizzazioni2 pagine

    Economic Exposure

    Caricato da

    Bhuvan Gondal
    Economic exposure refers to the effect unexpected currency rate fluctuations have on a company's cash flows. It is long term in nature and can substantially impact a company's market value. A company's economic exposure is higher when both its product prices and input costs are sensitive to currency movements and it does not adapt its markets, products, or sourcing in response to currency changes. Lower economic exposure results when costs and prices are less sensitive to currency fluctuations and a company demonstrates flexibility in adapting to currency rate movements.

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    © All Rights Reserved
    Scarica in formato PPTX, PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    di 2

    Economic Exposure– Meaning

    • Effect caused on a company’s cash flows due to


    unexpected currency rate fluctuations.
    • Long term in nature .
    • Have substantial impact on company’s market value.
    • As the foreign exchange volatility rises, the
    economic exposure increases and vice versa.
    Determining Economic Exposure
    • Economic exposure is higher for firms having both, product
    prices and input costs sensitive to currency fluctuations.
    • It is lower when costs and prices are not sensitive to
    currency fluctuations.
    • Economic exposure is higher for firms which do not adjust its
    markets, product mix, and source of inputs in accordance
    with currency fluctuations.
    • Flexibility in adapting to currency rate fluctuations indicates
    lesser economic exposure.

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