Suppose That XYZ International Company Has Purchased a Swiss Francs

question 20

Essay

Suppose that XYZ International Company has purchased a Swiss francs futures contract (contact size is SFr 125,000)at a price of $0.8250 at $0.83.If the spot rate for the Swiss franc at the date of settlement is SFr = $0.8250,what is the Company's gain or loss on the contract?

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Definitions:

Obsolete Inventory

Items that can no longer be sold due to outdating, changes in market demands, or deterioration, often leading to their removal from inventory at a loss.

Current Ratio

A financial metric illustrating a firm's capacity to cover its short-term debts within a year, determined by dividing current assets by current liabilities.

Capital Expenditures

Money utilized by an organization to buy, refine, and preserve solid assets such as estates, production sites, or equipment.

Fixed Asset Sales

The process of selling long-term assets, such as property, plant, and equipment, often to generate cash or reduce operational scope.