U.S.-based Anderson Company engages in a number of foreign currency transactions that have resulted in the following balances:
Cash: British pounds 800,000
Cash: Swiss francs 500,000
Accounts receivable: Swiss francs 3,200,000
Accounts receivable: British pounds 1,050,000
Accounts payable: Swiss francs 700,000
Accounts payable: Swedish krona 800,000
Notes payable: Swedish krona 200,000
Management forecasts the following exchange rate changes for the near future:
• The Swiss franc will weaken against the dollar by 5 percent.
• The British pound will strengthen relative to the dollar by 10 percent.
• The Swedish krona will strengthen against the dollar by 15 percent.
Required:
Develop a strategy for Anderson's foreign currency. The strategy should maximize Anderson's gain or minimize its loss, whatever the case.