Bowman-Daniela-Mainland Is a Major Producer and Exporter of Agricultural Commodities

question 64

Essay

Bowman-Daniela-Mainland is a major producer and exporter of agricultural commodities.It has sold soy beans for future delivery to a Japanese firm and expects to receive payments of 400 million yen in six months and another 400 million yen in one year.To lock in the exchange rates on these two payments, BDM arranges forward contracts with an investment banker to sell 400 million yen at $0.0110 in six months and $0.0115 in one year.What will BDM's cash flow be in dollars from each of these transactions? How has it fixed its revenue in dollars from the soy bean sales?

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Definitions:

Withdraws

Money taken out from a business by its owners for personal use.

Bonus Distribution

The payout of extra compensation to employees or partners beyond their regular earnings.

Capital

The financial assets or the financial value of assets, such as cash, that are utilized by a company to fund and sustain its operations and growth.

Profits And Losses Ratio

A financial metric that compares the profits and losses of a business, showing the relationship between net profits and net losses over a specific period.