If a Company Has a EUR 100 000 Account Payable

question 55

Multiple Choice

If a company has a EUR 100 000 account payable in three months and it expects the AUD to appreciate by the time of payment,a reasonable strategy would be to:

• A) lag the payment cash flow.
• B) borrow the present value of EUR 100 000 and do a money market hedge in the Australian market.
• C) enter into a forward exchange contract to sell euros in three months' time.
• D) lead the payment cash flow.

---

Definitions:

Days' Cash

A measure of a company's financial stability, indicating how many days the company can continue to operate using only its available cash without needing additional income.

Year-end Value

The financial value of an asset or account as recorded at the end of the fiscal year, which is important for annual financial reporting.

Internal Controls

Internal controls are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Sarbanes-Oxley Act

A U.S. federal law that aims to protect investors by making corporate disclosures more reliable and accurate.