Tag: currency risk

Currency risk is a risk taken on by businesses when conducting global trade or operating in multiple markets such as different countries. It is the risk of exchange rate changes, which can create a financial loss for enterprises – or even an opportunity for making a profit. This is of particular concern for companies that conduct currency trading operations or maintain international operations. They must actively monitor exchange rates to minimise their currency risk. Additionally, businesses should employ strategies such as using foreign currency hedging instruments and forward contracts to mitigate the effects of currency fluctuations and help secure their operations.

Ratio

Asset Coverage Ratio: Understanding Forex Trading Risk

by Penny Grimes

The Asset Coverage Ratio or ACR is a measure used by forex investors to determine the risk associated with their investments. ACR measures the ratio of total assets to total liabilities and is an important gauge of the strength of a company’s balance sheet. It is important for forex investors to keep an eye on this ratio, as changes in it can signal increased risk for their investments. A high ACR indicates that the company is able to easily cover its debts with its current assets, while a low ACR could be an indication of liquidity problems or other financial issues. Monitoring ACR is a great way for forex traders to reduce the risk associated with investing in currency markets.

Read More
Ratio

Debt Ratio Corporation: Strategies for Forex Trading

by Simon Cristian

Debt ratio is a corporate forex measure that compares a company’s total debt to its total assets. It is calculated by dividing total liabilities by total assets. A ratio greater than 1 indicates that a company has more debt than assets, while a ratio less than 1 indicates that it has more assets than debt. A high debt ratio can be a concern as it may indicate that a firm has stretched itself too thin and may struggle to meet its obligations. It is important for companies to closely monitor their debt ratios and take action when the ratio is too high.

Read More

Table of Contents

→ Index