Identifying Hedgeable FX Exposures: Accounting & Economic Risks
At Hedge Trackers, we are frequently asked to help identify “hedgeable” cash flow exposures under ASC 815 for our clients.
The GTreasury Blog
-
-
Protecting Margins on Foreign Sales: Dollars vs. Percent
Many companies protect margins from changes in foreign currency rates by using special Cash Flow hedge accounting strategies.
-
How the Coronavirus May Impact Your FX Cash Flow Hedge Program
Many companies will be affected by a global pandemic (should it come to fruition)—and a number are already being affected just by the containment efforts.
-
Best Practices for FX Hedge Performance Reporting
You’ve spent hours and hours developing a hedging strategy, identifying exposures, forecasting, and verifying hedge accounting, but your efforts shouldn’t stop there. To inform management the job is done, and done well, you need to go to the next level: performance reporting.
-
5 Challenges of Year-Over-Year Constant Currency Reporting
Many public corporations report earnings, revenues and expenses on a “constant currency” basis. The objective is to present financials year-over-year (YoY) for comparative purposes without the effects of currency movements.
-
3 Hurdles to Overcome When Starting a Cash Flow Hedge Program
The thought of applying hedge accounting can be daunting for those unfamiliar with the requirements for qualifying for special hedge accounting treatment under ASC 815. In this post, we will discuss the basic requirements for qualifying and applying special hedge accounting.
-
How to Use Hedge Accounting to Align Derivatives & Currency Gains/Losses
It’s mission-critical for companies to protect their margins, revenues, and expenses from unnecessary volatility. A lot of the time, volatility comes from currency changes — or, foreign exchange risk.
-
Is Your Balance Sheet Hedge Putting Your Cash at Risk?
Most treasury professionals are comfortable gathering and netting down same currency exposures that go in opposite directions.
-
3 Keys to FX Translation Accounting
Translation and transaction accounting are often confused for one another — but the difference between them is important. How can you tell them apart?
-
How & When to Use Exchange Rates
If your company transacts internationally, you know you need to use exchange rates to not only convert foreign currency transactions from the local currency into USD but also to translate foreign currency financial statements.
-
4 Essential Facts to Demystify Basic Cash Flow Hedges
Cash flow risk is defined as the variability of functional cash flows for an anticipated transaction or on an existing asset/liability due to a particular risk (in this case, foreign currency risk).
-
How to Determine Functional Currency Following New Guidance
ASC 830 provides guidelines on how to determine the functional currency of an entity. This is typically an election made by management based on the economic environment in which the company operates — but the process is more complex than that.
-
Restoring Economic Integrity in Foreign Currency Hedging
Treasuries use cash pooling — also known as a cash sweeping system — to provide liquidity to legal entities, aggregate cash for investment or to accelerate debt repayment.
-
10 Reasons Why Companies Hedge Foreign Currency Risk
How and why companies hedge foreign currency risk depends on factors such as the industry, risk management acumen and management team perspective. But most public corporations do hedge their FX risk for one reason or another.
-
How to Forecast Balance Sheet Exposures
In order to mitigate foreign currency gains and losses, companies routinely hedge away currency risk associated with balance sheet exposures. Companies need to identify all monetary accounts on the balance sheet and aggregate the foreign amounts in those accounts.