Acpana Business Systems Inc: Effect of currency exposure on revenue

Colette Southam*, Robert Schenkel

*Corresponding author for this work

Research output: Contribution to specialist publicationArticleEducation

Abstract

The vice president of operations for Acpana Business Systems Inc., a Canadian software development and backup-as-a-service provider located in Toronto, Canada, is concerned that the recent appreciation of the Canadian dollar is significantly affecting Acpana’s revenue and undermining the company’s organic growth. The case focuses on understanding and quantifying the risks associated with exchange rate fluctuation and its impact on a firm’s revenues and costs. The case introduces instruments available to hedge risk, including forward contracts and put and call options.
Learning Objective:This case is intended for an introductory finance class or as an early case in a class on derivatives or international finance. No prior knowledge of options and forward contracts is needed to use the case.
[Extract]
On March 2, 2011, Rob Schenkel, vice president (VP) of operations for Acpana Business Systems Inc. (Acpana), a Canadian software development and backup-as-a-service provider located in Toronto, Canada, had just finished a meeting with Jamie Brenzel, the company’s chief executive officer (CEO). During the meeting Brenzel had expressed concern that the recent volatility and appreciation of the Canadian dollar was significantly affecting Acpana’s revenue and undermining the company’s growth. Brenzel, who was preparing for the company’s upcoming board of directors meeting, tasked Schenkel with researching various hedging opportunities and determining if the problematic effects of the rising dollar on Acpana’s revenue could be diminished.
Original languageEnglish
Number of pages6
No.9B11N010
Specialist publicationIvey Publishing [Case Studies]
PublisherIvey Business School
Publication statusPublished - 29 Jun 2011

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