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If You Sell Forward USD to a Client Against EUR

question 539

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If you sell forward USD to a client against EUR, what is the first thing you should do to cover your exposure to exchange rate movements?


Definitions:

Purchase Price

The amount of money paid to acquire a product or service.

Accounts Payable Period

The average period it takes a company to pay its invoices from suppliers and vendors.

Cash Expenses

Expenses that require an immediate outflow of cash, as opposed to non-cash expenses like depreciation.

Beginning Cash Balance

The amount of cash a company has at the start of a financial period.

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