Hi everyone, I am not an FX person but have gone for a role in the FX world and have the following position which I need to provide feedback on in terms of a solution. If anyone can advise what the best solution for this scenarios is that would be so appreciated. Cheers
Times are tough for Tools Australia Pty Ltd . The retail tool business has been suffering increased competition and is being marginalized by their clients Bunnings and Masters. In addition to retail tools, Tools Australia Pty Ltd also successfully import large machinery for mining companies which has kept the business afloat. Tools Australia Pty Ltd ’s USD exposure is is around USD $20m per annum while the business has set a quarterly budget rate of $0.8800. Revenue has been declining at approximately 1% per year for past two years and the competitive landscape has forced the business to think about making changes.
Mark Richardson has recently been appointed CFO. He’s been told that the Tools Australia Pty Ltd has set a target of growing the retail business by 6% while Mark personally needs to find a way to improve margin on machinery products to help curtail the impact of losses while the business channel more funding to marketing initiatives.
Tools Australia Pty Ltd has always used the ANZ Bank for all their foreign exchange requirements. They typically back-to-back invoices with forward exchange contracts for all purchases. Stock purchases are made every month and are based roughly of last year’s sales. One of the problems that Mark has seen is that the business is constrained by limited credit and greater cash flow will be needed to grow. Mark has already spoken to other banks to see what they can offer and has now accepted a meeting with you.
