Ziroat Tosheva Aliqul Qizi

Anum Ikram
Group Assignment #4

FX exposure

Please test your strategy not only under EUR=315, CZK=11.4 and BUBOR=0.0211 or
EURIBOR=0.00263 but under the following unlucky conditions as well: EUR=400,
CZK=20 and BUBOR=0.08 or EURIBOR=0.04. What is happening with your pre-tax
margin? If you are under the market average of pre-tax margin=30%, how could you
modify your own strategy to perform better?

We measure the impact of transactional FX exposure on profitability.

Income Statement with original conditions:

Profit and loss statement (PLS) Czech (CZK) Austrian (EUR) Hungarian (HUF) Group (HUF)
Income 84,259,919 1,061,320 2,192,171,125 3,487,050,000
railway usage fees 52,808,771 345,815 115,768,116 826,719,830
fuel or electricity 23,337,148 321,677 85,298,616 452,670,357
maintenance 0 0 37,975,000 37,975,000
Expendit
rent 0 20,544 0 6,471,360
ures
wages 5,714,000 373,284 142,168,000 324,892,060
depreciation (vehicle) 0 0 37,975,000 37,975,000
depreciation (building) 2,400,000 0 48,000,000 75,360,000
EBIT 0 0 1,724,986,393 1,724,986,393
subsidiaries 0 0 0 1,724,986,393
Financial
gained interests 0 0 0 3,251,025
profit
paid interests + hedge 0 0 0 50,400,000
Pre-Tax Profit 0 0 0 1,677,837,418
corporate income tax 0 0 0 318,789,109
Profit after tax 0 0 0 1,359,048,308
Dividend 0 0 0 271,809,662
Profit for the year 0 0 0 1,087,238,647
Pre-tax margin 48.12%
 Income Statement with unlucky conditions:

The pre-tax margin is still 41.24% which is above the industrial average (30%), so no
modification is required.

Profit and loss statement (PLS) Czech (CZK) Austrian (EUR) Hungarian (HUF) Group (HUF)
Income 84,259,919 1,061,320 2,318,273,621 4,428,000,000
railway usage fees 52,808,771 345,815 115,768,116 1,310,269,536
fuel or electricity 23,337,148 321,677 85,298,616 680,712,375
maintenance 0 0 37,975,000 37,975,000
Expendit
rent 0 20,544 0 8,217,600
ures
wages 5,714,000 373,284 142,168,000 405,761,600
depreciation (vehicle) 0 0 37,975,000 37,975,000
depreciation (building) 2,400,000 0 48,000,000 96,000,000
EBIT 0 0 1,851,088,889 1,851,088,889
subsidiaries 0 0 0 1,851,088,889
Financial
gained interests 0 0 0 39,045,000
profit
paid interests + hedge 0 0 0 64,000,000
Pre-Tax Profit 0 0 0 1,826,133,889
corporate income tax 0 0 0 346,965,439
Profit after tax 0 0 0 1,479,168,450
Dividend 0 0 0 295,833,690
Profit for the year 0 0 0 1,183,334,760
Pre-tax margin 41.24%