The following are bad consequences of inadequacy of financial risk management EXCEPT a. The entity was able to forecast net cash inflows in pesos despite being highly exposed to foreign currency collections. b. The current year’s income is significantly higher this year resulting to payments of bonuses. However, there were net losses in the previous two to three years. This problematic cycle is common for the entity. c. A forward contract was used to hedge the risk of converting foreign currency-denominated receivables at P56:USD1. When the receivables were settled, the exchange rate was at P60. It caused the entity to lose out on the P4 per USD. d. The long-term debt has matured and was settled. It resulted to a 90% equity on the balance sheet. The remaining 10% is trade payables.
The following are bad consequences of inadequacy of
a. The entity was able to
b. The current year’s income is significantly higher this year resulting to payments of bonuses. However, there were net losses in the previous two to three years. This problematic cycle is common for the entity.
c. A forward contract was used to hedge the risk of converting foreign currency-denominated receivables at P56:USD1. When the receivables were settled, the exchange rate was at P60. It caused the entity to lose out on the P4 per USD.
d. The long-term debt has matured and was settled. It resulted to a 90% equity on the
Step by step
Solved in 2 steps
