INT 620 Preliminary Final Project Company Selection Guide
Selecting the right company can make all the difference in completing your final project. The Module One short paper task is designed as preliminary work that will help you in completing Milestone One:
Introduction and Broad Strokes of the Expansion Plan, due in Module Three.
Below are some hints to assist you with your company selection.
The company has to be a multinational public corporation. The company must do business in foreign currency and hedge for the risks associated with the foreign transactions.
The company has to be public, since you will need to review its full financial reports online. Use the U.S. Securities and Exchange Commission (SEC) webpage SEC EDGAR Company Filings to search companies you are interested in analyzing for the final project. Enter the name or ticker
of the company you are interested in. You need to pull Form 10-K and 10-K/A filings in order to see if the appropriate information is available.
What information should you look for in the financial statements?
You should look for great detail and lot of “notes” in the financial statements explaining how the company hedges its exchange rate risks.
Most hedging is done with derivatives and since 2010 the rules for reporting derivative securities have changed. Companies are required to report all their holdings in derivative securities and their impacts on income statements and balance sheets. This is mostly to prevent
companies from trying to use derivatives for arbitrage instead of hedging. Please review the FASB Summary of Statement No. 133 in the module’s resources for more detail.
A good way to search annual financial statements is to use Ctrl + F on your keyboard to open a search window. Then type in some of the keywords:
o Foreign currency
o Derivatives
o Hedging
o Foreign exchange
The company should have sufficient information. It should have hedging tools such as swaps, options, futures, and forwards, and it should discuss foreign currency or exchange in its financial statements.