6FNCE005W: Foreign Exchange Risk Management at AB Foods - Accounting and Finance Assignment Help

Assignment Task:

Task:

Assignment details:
The coursework assignment for this module is in the form of an individual report. You are asked to develop and propose a solution for a company’s transaction/economic exposure to foreign currency risk. For this you will be expected to use a variety of resources and databases (both written and electronic) and manage time effectively.
You are asked to treat this report as though you work for Associated British Foods (AB Foods) and you were asked by your line manager (boss) to prepare a report about AB Foods’ foreign exchange risk exposure and management. This is a general company report for internal use. There is nothing new in AB Foods’ business that you need to focus on but rather it is the company’s general situation. You are looking at the whole company and market and are considering a range of options for both the nature of the FX exposure as well as what it can potentially do to hedge its FX exposure (both economic and transaction exposure). Using what we have learned in this module, you are required to develop a report that will help AB Foods’ senior management team to plan for the future.
Detailed instructions:

• Present a brief and critical overview of Associated British Foods as well as its financial circumstances with special focus on things that will be relevant for their foreign exchange exposure: Where are they headquartered and what is their functioning currency? Where do they manufacture their products and/or source raw materials? Where do they sell their products? In what proportion? What are the main currencies they need? Etc. You may wish to use graphs or charts obtained from reputable sources. (approx. 400 words)
• (20%)
• Critically discuss the company’s current foreign exchange risk management policy (focusing on transaction/economic exposure). For this you will need to go through their latest financial statements (e.g. annual report) and/or other company documents and discuss if there is anything already in place (e.g. FX derivatives they may already have in their accounts, foreign currency borrowings, hedge ratio, etc.). Draw conclusions from this analysis. (approx. 700 words)
• (25%)
• Drawing on Q1 and Q2 above, summarise the company’s most important FX exposures, and analyse what hedging options they should use in the short- and long-term to manage their business effectively. Outline and critically discuss your recommendations on the FX hedging strategy, informed by (i) what we have studied about hedging strategies in the module, and (ii) current/forecast market conditions, in particular regarding relevant FX rates (e.g. if the price of the $US is expected to go up or down in the coming months, what does that mean for their hedging strategy?) You may wish to use graphs or charts obtained from reputable sources. (approx. 700 words)
• (25%)
• Finally, make your conclusions about the company’s current FX exposure and your own recommendations. Consider that this report will be read by people who have limited time on their hands and may only focus on your main findings and recommendations: use this space to focus on what’s most important; what are the main challenges when it comes to FX exposure and what is the best way forward? (approx. 200 words)
• (15%)
• To research this coursework use multiple resources: textbooks; FAME, the Financial Times; official company accounts and other reputable news sources/articles from journals/books. The quantity and quality of sources will be taken into consideration.
• (10%)
•  
• Presentation, formatting and referencing:
• (5%)
• The report should be clearly written in proper English, with a clear structure and arguments that flow from one paragraph to the next; use of any business/ scientific jargon clearly explained.
• The report needs to include a cover page (with module title and code, assignment title and word count), table of content, page numbers, explicit headings, and reference list. But there is no need for an executive summary, introduction or conclusion as we have a specific conclusion/recommendation section (Q4).
• The report should include relevant tables and figures (well-formatted and well-referenced) as visual aids and to support the argumentation.
• Formatting guidelines: font size 12, text alignment: justify, line spacing: 1.5.
• All sources should be cited and referenced using the Harvard referencing style. If you are not sure about this, the library provides guidance here:
• https://www.westminster.ac.uk/library-and-it/support-and-study-skills/guides-and-tutorials/referencing-your-work
• General instructions:
• Anonymous marking: do NOT include your name or student number within the file name or anywhere within your submission.
• The assignment should be produced in Word. It should be submitted electronically through Blackboard and will be checked via Turnitin for plagiarism.
• The rules on late submission and plagiarism are applied and fully enforced by the School.
• The word limit is 2,000 words (+/-10%) excluding cover page, table of content, references and appendices. The approximate word counts are for guidance only; you may need fewer words in some sections and more in others.
• For each question, you will be assessed on the completeness and accuracy of your analysis, as well as the depth of your critical analysis and evidence of independent research.
• Marking criteria and grading rubric:
• Below is presented a detailed marking scheme that will be used to mark the coursework. Note that we allow flexibility between scales, i.e., we will adjust your overall mark if your work stands between two scales.
• Marking criteria Scale 20 Scale 40 Scale 60 Scale 80 Scale 100
• Brief and critical overview with special focus on FX exposure (20%) Unrelated or not relevant. Contains limited useful information about key FX exposures Contains good discussion of key FX exposures, without critical comments or opinions Contains good discussion of key FX exposures, with supporting (relevant) tables/graphs, and some critical comments or opinions Contains thorough discussion of key FX exposures, with supporting (relevant) tables/graphs, and good critical comments or opinions
• Current management of FX exposure (long/short positions in FX, derivatives, etc.) (25%) Contains some discussion of limited scope/relevance. Contains relevant discussion of current policy (e.g. hedge ratio, use of derivatives or other types of hedging) for economic OR transaction exposure Contains relevant discussion of current policy (e.g. hedge ratio, use of derivatives or other types of hedging) for both economic and transaction exposure AND relevant conclusion Contains relevant discussion of current policy (e.g. hedge ratio, use of derivatives or other types of hedging) for both economic and transaction exposure AND relevant excerpts/tables from latest annual report AND critical interpretation of the data AND relevant conclusion Contains relevant and thorough discussion of current policy (e.g. hedge ratio, use of derivatives AND other types of hedging) for both economic and transaction exposure AND relevant excerpts/tables from latest annual report (and other reputable sources) AND critical interpretation of the data AND relevant conclusion

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