The writer is very fast, professional and responded to the review request fast also. Thank you.
Presentation/PPT
27/08/2022
Case Study
You have just been hired as the new treasurer of an Australian firm called Sun Solar Panels
(SSP). SSP produces commercial solar panels. It is a well established brand in both the UK and
New Zealand. In fact, it distributes (sells) its entire output to UK and New Zealand retailers.
These sales are made through SSP’s UK and New Zealand subsidiaries which act as distributors
of the product. Each wholesale transaction in the UK is settled in GBP and each wholesale
transaction in New Zealand is settled in NZD.
SSP’s board is made up of seven directors. Four of these directors are family members who
founded the business. Three are from outside the family but also from solar panels’ sales
backgrounds. None have any finance or accounting education or experience. The raw materials
used to make the solar panels are sourced from Indonesia. The solar panels are manufactured
in Australia.
About 30% of manufacturing costs can be attributed to labour, 50% to raw material costs and
20% to other expenses (factory space, electricity etc.). Based on current exchange rates and
cost structures, the average wholesale price of a commercial solar panel is AUD$10 000 and the
cost to manufacture such a panel is AUD$5,000. SSP strives to maintain this margin.
Average order size is 20 solar panels. The manufacture and sales processes work as follows:
Step 1: a UK or New Zealand retailer enters into a sales contract with SSP’s local subsidiary (ie.
SSP’s New Zealand or UK subsidiary). The sales contract stipulates that delivery will occur in
three months. The price in local currency (ie. GBP or NZD) is also stipulated in the contract.
Step 2: After the sales contract is executed, SSP immediately orders raw materials from
Indonesia. This order stipulates a six week delivery of raw materials and the price of the raw
materials which is denominated in IDR.
Step 3: After receiving the raw materials and settling the account with the Indonesian supplier
in IDR, the company manufactures the product as per the sales contract and ships the product
off to the UK or New Zealand.
Step 4: After receiving the finished product, the UK or New Zealand customer pays for the
goods. SSP is about to engage in a new investment project which it will fund through a debt
facility of AUD$100 million and wants protection against increases in interest rates over the next
five years. SSP also has purchased 10 fixed income securities using retained earnings each with
a face value of AUD$1 million with five years to maturity and a coupon rate of 10% paid once
per annum. The issuer has a call provision which enables them to prepay the debt at any time.
Currently the Company has no definitive strategies on managing financial risk.
A ‘Business Case’ is needed with recommendations for your board that pitches the need for a systematic financial risk
management strategy and the financial derivatives and tools that could be used as part of this
strategy.
The business case should focus on the next 12 month period. This business case should be
prepared as a report. The structure of the report should be appropriate to your audience,
include an executive summary and address each of the following questions.
Question
Outline and explain the risks associated with the fixed income security the company has
purchased. Use examples of possible scenarios that may occur for SSP to illustrate the nature of these risks.
Question
Present some alternatives the company may look into to protect itself against interest rate rises
associated with debt funding for the new investment project.
The writer is very fast, professional and responded to the review request fast also. Thank you.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more