Aspen Technology, Inc. Quantity price applied. Add Copyright Permission. Copyright Permission Qty:. Current Stock:. Buying for your team? See quantity pricing. This is a copyrighted PDF. Add copies before sharing with your team. Are you an educator? Product : Pages: The chief financial officer of a rapidly growing U. Get access to this material, plus much more with a free Educator Account:. Already registered? Sign in. This review is prompted by changes in the firm's business, notably its acquisition of a United Kingdom subsidiary, other growing overseas expenses, and its recent initial public offering.
To allow students to analyze how a small, young firm's business strategy creates currency exposure and a need to manage this exposure.
To allow students to explore the goals and purposes of currency hedging, the measurement of exposures, and appropriate policies to be followed. Advent A software to optimize the tradeoff between capital expenditures for energy saving heat exchangers and the energy saving realized. Risk Exposure 2. Management Risk Perform by AspenTech Foreign Exchange Risk eliminated all sales transaction exposure arising from foreign currency denominated license contract inline with its risk management policy by doing hedging : Sale non USD installment receivable for USD forward currency agreement.
The contract with GE and Sanwa in selling the account receivable has limited recourse agreement. Liquidity Risk To manage its liquidity risk in order to cover their day to day operation, AspenTech. AspenTech also has debt to Massachusetts Capital Resources placed a seasonal line of credit facility with New England bank. Recommendation AspenTechs should reexamine the firm risk management policies and practices in light of the changes :.
AspenTechs should review and determine an acceptable level of risk. It involves determining reasonable level of risk in-line with appropriate opportunity to gain. AspenTech should hedge only the net exposure Net foreign exchange exposure in German and Japan Forward contract for Belgians operating expense.
AspenTech should look other possibility to deal with other financial institution to increase their bargaining position to GE and Sanwa With higher bargaining position, AspenTech can get lower cost and better position in managing their credit risk. Recommendation Others Hedging Instrument : Plain-Vanilla Options give the buyer of the option the right but not the obligation to buy call or sell put a specific amount of currency at a predetermined strike price exchange rate High cost.
Average-Rate Options Spot rate are calculated as an average over a period Transaction possible during the expiry period at several predetermined dates Strike rate can be fixed or floating. Recommendation Others Hedging Instrument : Cross-currency transactions transaction basically does not provide ability to hedge or secure any risk provide probability of arbitrage if there is a difference between cross rate and indirect rate.
Foreign currency money-market borrowing Borrowing in the money market, rather difficult to use since the company need to determine level of debt that matched with its cash inflow from other matched currency. Open navigation menu. Close suggestions Search Search.
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