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  • Foreign Exchange Risk Present

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    SriSaraswathy
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    Sime Darby is exposed to four main types of risk: foreign exchange risk from transactions involving multiple currencies like the US Dollar, Chinese Yuan, Euro, and Australian Dollar; interest rate risk from borrowings and deposits with fluctuating rates; credit risk from the potential failure of borrowers to repay loans or meet obligations; and liquidity and cash flow risk if there are insufficient funds to meet short-term financial commitments, though Sime Darby aims to maintain prudent policies to ensure sufficient cash flow.

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    Sime Darby is exposed to four main types of risk: foreign exchange risk from transactions involving multiple currencies like the US Dollar, Chinese Yuan, Euro, and Australian Dollar; interest rate risk from borrowings and deposits with fluctuating rates; credit risk from the potential failure of borrowers to repay loans or meet obligations; and liquidity and cash flow risk if there are insufficient funds to meet short-term financial commitments, though Sime Darby aims to maintain prudent policies to ensure sufficient cash flow.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    12 views1 page

    Foreign Exchange Risk Present

    Uploaded by

    SriSaraswathy
    Sime Darby is exposed to four main types of risk: foreign exchange risk from transactions involving multiple currencies like the US Dollar, Chinese Yuan, Euro, and Australian Dollar; interest rate risk from borrowings and deposits with fluctuating rates; credit risk from the potential failure of borrowers to repay loans or meet obligations; and liquidity and cash flow risk if there are insufficient funds to meet short-term financial commitments, though Sime Darby aims to maintain prudent policies to ensure sufficient cash flow.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Sime darby exposed to 4 types of risk which are foreign exchange risk, interest rate risk, credit risk

    and liquidity and cash flow risk.

    Foreign exchange risk

    Happens when 2 different currency takes place in a transaction.


    The risk that will occur in foreign exchange risk is exchange rate risk.it happens due to
    uncertain changes in the rate of exchange.
    Currencies that involved in sime darby are United States Dollar, Chinese Renminbi,
    European Union Euro and Australian Dollar.
    Interest rate risk
    Interest rate risk mostly occurs for loans and bonds. For Sime Darby interest rate risk arises
    from its borrowings and deposits placed with financial institutions.
    Credit risk
    Credit risk is the possibility of a loss resulting from the failure of the borrower to repay the
    loan or to fulfil contractual obligations. Credit risk of sime darby arises on sales made on
    credit terms, deposits with banks, and many others.

    Liquidity and cash flow risk


    Insufficient funds to meet its financial commitments in a shorter period. Sime Darby
    maintains a prudent borrowing policy which is aimed towards maintaining sufficient cash for
    all cash flow requirements, managing debt and investment portfolio.

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