Wood-Product Company Business Operations
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Question Description: Suppose a U.S. wood-products company has facilities and employees in Canada providing its raw materials (wood), but has most of its sales in the United States.
(1) What are the most important operational and financial risks in this arrangement? (2) How can the company pay its Canadian employees, who presumably want Canadian dollars, when its U.S. customers are paying in U.S. dollars? Furthermore, how can it calculate its profit if revenue is in U.S. currency and most of its costs are in Canadian currency?
Answer previewThe wood-product Company with employees and facilities in Canada but has most of its sales in the US is likely to operate on international frameworks. This means the operational and financial risks experienced comprise of foreign exchange risks. Exchange rate fluctuations have a high probability of affecting operating income and sales in this arrangement…(350 words)