Exchange Rate Exposure Nike Faces

Introduction Part: [20 Marks] The structure of the presentation slides will be as follows:
• Professional title slide (Contains the title of the Presentation, Subject code, StudentName, and ID). [5 Marks] • 1 Slide – Presentation Structure in bullet points. [5 Marks] • 1 Slide – Brief overview of Nike’s business operation. [10 Marks] PART ONE: [40 Marks] • 3-4 Slides – Nature and the major sources of exchange rate risk exposure Nike
faces. [15 Marks] • 1-2 Slide – Types of exchange rate risk exposure Nike faces. Include any figure,
amount that is discernible in the annual report. [10 Marks] • 3-4 Slides – The risk management applied to hedge these risks by Nike.
Include quotation if necessary but avoid long quotation from the annual report. [15 Marks] In addressing the above tasks students should review the annual report. Specifically
Part 2 management discussion section (Item 7), and relevant section of financial and operating highlights.
PART TWO: [40 Marks] • 1 Slide – Potential exchange rates in Q3. [5 Marks] • 1-2 Slides – Impact of exchange rate movement on the operating cash flows. [10
Marks] • 1 Slide – Assessing the scale of operating exposure (variability, range, etc) [5 Marks] • 1-2 Slides – Suggested restricting options. [5 Marks] • 2-3 Slides – Impact of suggested restructuring options on Nike’s economic exposure.
[15 Marks] The company believes that due to the current political and trade tensions between China and the USA, the
exchange rate between USD/YUAN will be volatile. Currently, the Yuan future contract for quarter 3 is trading
at $0.158 per USD. Moreover, the expected quarterly inflation in China for Q3 is 1.10 percent and 1.35 percent
in the USA. Finally, the forward rate of the Chinese Yuan for quarter 3 contains a premium of 1.12%. Given the
macroeconomic information, the CFO believes that a range of Q3 spot rate forecast is possible. Moreover, the
company may face significant operating exposure.
Using the projected operating result above, develop the partially consolidated operating performance for Nike
for Q3. Develop the ranges of possible consolidated operating performance at various possible exchange rate
forecasts. How do you characterize the variability of the cash flow?
Suggest at least two operational restructuring options that can reduce the economic exposure of Nike.
Document their impact on your suggested operational restructuring option on the economic exposure of the
firm.
ADDITIONAL FORMATTING NOTES
The submission will be a PowerPoint presentation slide format, Dot write too much in each slide. Similarly do
not just put bullet point that does not
explain much.
Total word counts will be approximately 1000 words
The Presentation Document can be submitted either in PPT or PDF format. PDF format is preferable. In the
case of PDF format, ensure 1 slide per page during conversion from PPT to PDF format.
NOTE