Reference no: EM132649276
Question - Case - Joe Six Pack
InBev, the world's largest brewer, is headquartered in Leuven, Belgium. In 2007, InBev employed nearly 89,000 people worldwide to manage more than 200 brands. It has sales in over 130 countries primarily in North America, Europe, Asia Pacific, and Latin America. In 2008, InBev purchased Anheuser-Busch, the largest brewing company in the United States. As a result of this transaction, the combined company is called Anheuser-Busch InBev.
1. Obtain the 2007 Annual Reports of InBev and Anheuser-Busch, and comment on the impact of foreign companies on their businesses. What impact did the 2008 business combination have on financial reporting related to foreign currency fluctuations on the new Anheuser-Busch InBev company?
2. Operating in over 130 countries, InBev is affected by differing economic conditions in many markets around the world. Often weaknesses in some currencies are offset by strengths in others. List a few strategies that multinationals can use to protect themselves against fluctuation of exchange rates.
Case: Stringer's Choice
Sony Corporation is a global business that produces a wide variety of entertainment products, including electronics, music, movies, and PlayStation. Sony's 2008 Annual Report states (page 74):
A large proportion of Sony's consolidated financial results, assets and liabilities is accounted for in currencies other than the Japanese yen. For example, only 23% of Sony '.s sales and operating revenues in the fiscal year ended March 31, 2008 were originally recorded in Japan.
Find Sony's most recent annual report on its website. After reviewing the financial statements including the footnote on foreign currency translation, refer to the Operating and Financial Review in the Financial section for a discussion of the implications of currency: fluctuations on Sony's financial results.
1. What impact does the globalization of Sony's business have on its reported earnings and balance sheet?
2. What strategies do global companies employ to try to manage the risks associated with exchange rate fluctuations? How effective arc these strategies?
Are issues related to exchange rate fluctuations likely to become more or less common in financial reporting in the future?
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