Cash and Currency risk: Difference between pages

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1. ''Liquidity.''
The risk of losses or other adverse effects resulting from a change in a foreign exchange rate, or from other unfavourable changes in relation to a foreign currency.  


The most liquid of current assets, cash represents money in hand - or in banks or other financial institutions - which is immediately available.


Examples include:


2. ''Money.''
(i) a final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk), or


Physical banknotes and coins.


(ii) a change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk), or


3. ''Financial reporting - balance sheet - assets.''


The current asset reported, along with cash equivalents, as a single aggregated figure in the primary statements of financial position and statement of cash flows.
(iii) a change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk).
 
 
A more complex area of risk concerns contingent, or pre-transaction risk.
 
 
Also known as Currency exposure or Foreign exchange risk.






== See also ==
== See also ==
* [[Balance sheet]]
* [[Contingent risk]]
* [[Cash and cash equivalents]]
* [[Cross-currency interest rate swap]]
* [[Cash burn rate]]
* [[Foreign exchange risk]]
* [[Cash equivalents]]
* [[Transaction exposure]]
* [[Cash market]]
* [[Translation exposure]]
* [[Cash reserves]]
 
* [[Cashflow]]
 
* [[Cash flow statement]]
===Other links===
* [[Current assets]]
[http://www.treasurers.org/node/5281 Currency risk, Will Spinney, ACT 2009]
* [[Financial reporting]]
* [[Funds]]
* [[Fungible]]
* [[IAS 7]]
* [[Legal tender]]
* [[Liquidity]]
* [[Liquidity risk]]
* [[Money]]
* [[Payments and payment systems]]
* [[Petty cash]]
* [[Statement of cash flows]]
* [[Statement of financial position]]


[[Category:Cash_management]]
[[Category:Manage_risks]]

Revision as of 09:37, 1 June 2015

The risk of losses or other adverse effects resulting from a change in a foreign exchange rate, or from other unfavourable changes in relation to a foreign currency.


Examples include:

(i) a final receipt/payment of a different amount of domestic currency equivalent, than expected when a currency transaction was committed to (transaction risk), or


(ii) a change in asset/liability values in a balance sheet, profit/loss in an income statement (translation risk), or


(iii) a change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk).


A more complex area of risk concerns contingent, or pre-transaction risk.


Also known as Currency exposure or Foreign exchange risk.


See also


Other links

Currency risk, Will Spinney, ACT 2009

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