Metallgesellschaft Case Study A new marketing program: In 1992‚ MGRM began implementing an aggresive marketing program in which it offered long term price guarantees on deliveries of gasoline‚ heating oil and diesel fuels for up to 5 or 10 years. Two contract alternatives are offered to customers ‘FIRM-FIXED’ program ‘FIRM-FLEXIBLE’ program FIRM-FIXED: Customers are agreed to fixed monthly deliveries at fixed prices FIRM-FLEXIBLE: Fixed price and total volume of future deliveries but
Premium Futures contract Forward contract
Case Study #1 Metallgesellschaft AG Metallgesellschaft Refining and Marketing (MGRM)‚ was a subsidiary of Metallgesellschaft AG in Germany. In the early 90’s‚ MGRM chose to being selling long term (5 and 10 year) fixed price contracts for gasoline‚ heating oil‚ and diesel fuel. These contracts were successfully marketed with MGRM contracted for 160 million barrels of oil as of Nov 1993. Due to the fact that the MGRM entered into long term commitments for fuel delivery with fixed pricing‚ this
Premium Futures contract Short Forward contract
Hedgi ng 1. Look at the following sentences. Write whether each sentence is non-committal (NC) or strongly states its point (S). a ’context determines to a large extent the meanings of any non-verbal behaviours’. (p. 137) b ’We learn them largely from observing others.’ (p. 137) c ’Albert Mehrabian (1976) argues that the total impact of a message is a function of the following formula.’ (p. 137) d ’Regulators are clearly culture-bound and are not universal.’ (p. 143) e "When these adaptors occur
Premium Nonverbal communication Cognition Mind
The HealthSouth Debacle: A Legal and Ethical Perspective Jay Buntemeyer Regis University Abstract HealthSouth Corporation is the largest operator of rehabilitation hospitals in the United States. Since the company’s inception in 1984‚ HealthSouth has garnered the attention of Wall Street and millions of investors. However‚ the attention was because the iconic HealthSouth was involved in one of the largest accounting fraud scandals in United States history. HealthSouth’s founder and CEO‚ Richard
Premium Fraud Richard M. Scrushy Ethics
S & S Air: Case Study: S & S Air’s Mortgage 3001-3 FNCE Financial Management Week 4 William Jones October 9th‚ 2012 Case Study: S & S Air’s Mortgage Background: S&S Air manufactures light aircraft. The owners of S & S Air‚ Mark Sexton and Todd Story‚ were impressed by the work Chris had done on financial planning. By using Chris’s analysis and looking at the demand for light aircraft‚ they decided that their existing fabrication equipment was sufficient‚ but that it was
Premium Interest Mortgage loan Loan
available in India and the use of foreign currency derivatives is permitted for hedging purposes only. This study aims to provide a perspective on managing the risk that firm’s face due to fluctuating exchange rates. It investigates the prudence in investing resources towards the purpose of hedging and then introduces the tools for risk management. These are then applied in the Indian context. The motivation of this study came from the recent rise in volatility in the money markets of the world
Premium Foreign exchange market
foreign exchange hedging policy? GM’s foreign exchange hedging policy has three primary objectives. Its first objective is to reduce cash flow and earnings volatility. Specifically‚ management hedges the company’s transaction exposures and consciously ignores any balance sheet exposures (translation exposures). Second‚ GM aims to minimize the management time and costs dedicated to global FX management. The company employs a passive FX management strategy since an internal study determined that
Premium Forward contract Futures contract Hedge
Derivatives and Hedging Assignment: Hedging Strategy comprised of GM stock and 3.5% is comprised of Ford stock. Assume that GM and Ford are the only automobile industry holdings in the portfolio. Assume that you are bearish on the automobile industry over the next six months and neutral to bullish on all other industries. Utilizing derivatives create a hedging strategy to protect the portfolio over the next six months from your bearish automobile industry outlook. Risk management is defined
Premium Derivative Hedge Futures contract
S&S Air‚ Inc. 2009 Income Statement Sales COGS Other Expenses Depreciation EBIT Interest Taxable Income Taxes (40%) Net Income $20‚077‚000 $14‚985‚000.00 $2‚399‚000.00 $655‚000.00 $2‚038‚000.00 $362‚000.00 $1‚676‚000.00 $670‚400.00 $1‚005‚600.00 Dividends Add. To RE $205‚000.00 $800‚600.00 2009 Balance Sheet Current Assets Cash AR Inventory Total CA Fixed Assets Net P&E Total Assets 1. Ratios Current Ratio Quick Ratio Current Liabilities $365‚040 $1‚534‚680 $1‚238‚500 $3‚138‚220 AP Notes Payable
Premium Balance sheet Financial ratios Generally Accepted Accounting Principles
Dozier Hedging Alternatives Forward Market Hedge: Dozier would purchase U.S. dollars under a forward contract. The contract would obligate Dozier to pay £1‚057‚500 in exchange for £1‚057‚500 x 1.4198 $/£ = $1‚501‚438.50 assuming the transaction was at the quoted 3-month forward rate in Exhibit 4. Relative to the value of the contract at the current exchange rate‚ £1‚057‚500 x 1.4370 $/£ = $1‚519‚627.50 Dozier would accepting a reduction in the revenue from the contract of $1‚519
Premium Forward contract United States dollar Currency