Selection of companies
The first chosen company is Apple Inc. which is an electronics company responsible for developing wireless mobile gadgets that are now available in the market. Apple is one of the most famous companies in the tech industry. The reason behind is their hot and trending product that is the Apple iPhone products that are sold to all electrical networks around the world. Apple Inc., is now becoming known to remote parts of the world due to their innovative products that are penetrating the communications industry. The reason behind is that they hold some of the most anticipated electronic gadgets in the world. Apple Inc., has been expanding their marketing presence because they are consistently releasing new version in some of the most anticipated innovation, which is the mobile handset device. Smart phones are now the most trending innovation because it provides access to internet while communicating with other individuals or users with similar gadgets.
On the other hand, Toshiba is another electronics company, responsible for producing wireless or wired technological gadgets. One of the most famous products is the laptop, which is a mobile computer device that is also available on the market. It offers computerized products that allow users to connect with other users from anywhere in the world. It also helps users to process, manipulate, and release new data so that it can seek to accomplish common interests. Toshiba is also producing other electronic appliances such as refrigerators, television sets, microwave, oven, blender, mixer, and other types of electronic products that you can see when you visit various department stores. Toshiba is a respected electronics supplier of appliances to be able to provide amenities and services for residents to make their life productive.
Financial Report
Apple Inc.: The price range of common stock of the company for the fourth quarter of 2015 is 132.97; 134.54 for third quarter; 133 from 2nd quarter, and 119 for the first quarter. Dividends of the company are 11.4 billion in USD while holders have allocated 25, 924 numbers of shareholders. Shares purchased is 131, 775. For 2015, net sales amounted to 233, 715 USD, while net income reached to 53, 394. Total assets is 290, 000 while total liabilities is 171, 124. Net sales rose to 50.9 billion as compared in 2014 that was generated by all corners of Apple Inc. products. Share balance of the company is 6, 294, 494 according to Apple Inc. Financial report (2016).
Toshiba: Net sales reached an amount of 6,655, 894, which is an increase of 166,000 product sales from last year. Operating income is 5, 079, 028. The cash dividend of the company is 4 with a basic share of 8.93 Japanese Yen. Total number of assets is 6, 334, 778 with a total number of employees to 198,741. Operating income is 170.4 in billions of yen, while the shareholders amount to 37.8 billion Yen. Current liabilities amount to 2, 910, 868 with long-term liabilities to 4, 769, 421. Income tax is 155, 659, while comprehensive income attributable to shareholders of the company is 90, 638 as based from Toshiba’s Financial Report (2016).
Foreign currency exposures
Apple Inc.: As based from the United States, the company’s foreign currency pertains to its foreign monetary bonds or issues made by a certain locality or a territory. This is the current financial representative of a country’s money when residents will be initiating their transaction activities. Purchasing for commodities or services are just some of the most valuable activities that a person will be accompanying in order to ensure that they can become productive with their personal and professional affairs. Apple is listed in NASDAQ since in 1990.
Toshiba: This Company is currently based in Japan. Its foreign currency is representing an Asian based the economic value and financial image of a country that is aiming to establish a fair and prosperous financial management of assets and liabilities. Funds can be able to be saved, manipulated, and invested to provide a general need for the society to improve their socio-economic lifestyle. Toshiba is currently listed in Nikkei stock exchange since 1992.
Products
Apple Inc. produces, manufactures, and distributes electronic products that are mobile and wireless. These are laptops, mobile phones, iPod, iPad, and smart watch gadgets. These are electronic products that are now available in the market, which aims to promote communication and social media promotion via accessibility of websites.
Toshiba produces mainly electrical appliances. They are products that are offered to ensure that household items can be attainable. Refrigerators, television, radio, microwave, and other household items are being sold. Toshiba are also producing electronic gadgets such as laptops to ensure that communication is attainable through accessible internet resources.
Transaction exposure
Apple Inc. faces transaction exposure by being involved in international trade, currency exchange, and local transactions. It affects financial issues that are essential to regulate investments of a certain company. This exposure can risk accounting measures that promotes financial risks such as mismanagement of funds and loss of profits. Exposure with the transaction will enable the wealth of its stakeholders such as administrators, employees, and clients of a certain organization to be vulnerable with the loss of their investments and assets. Finances are important to an operating institution for the reason that it is the core value of the company in order to facilitate all kinds of assets and liabilities that will help to integrate profitable monetary issues according to Allayannis, et al (2002).
Toshiba’s transaction exposes its investments that are made in big volume of assets are needed to sustain and supplement its operation to be able to implement its manufacturing production and the constantly maintaining the amount of workload within its premises. Normally, an enterprise manages their finances regularly because it will identify the history of their financial issues as well as to determine the outflow of finances. When finances are exposed, it will now be causing vulnerability which will have a negative impact and will possibly produce harm whether if it is intentional or unintentional. Without financial management, a company will not be able to determine the progress of their financial outputs for a certain period of time because it serves as a statistical analysis whether a company is performing positively or negatively as claimed by Baker (2011).
Operating exposure
Apple Inc.’s operating exposure is affecting its cash flow can be affected by its earnings and investments to suffer brought about by the fluctuating foreign currency exchange rates. This is a type of foreign exchange exposure that is brought about by the changes made by the exchange rates affecting the currency of a certain monetary institution. This is also known as economic exposure, in which it is concentrating with the application of economic related issues that is brought about by the presence of negative exposure that has been caused by the declining value of assets and liabilities.
Toshiba’s economic exposure is vulnerable by overspending that the government incurred with their national budget. The government’s financial sector suffered a huge consequence by not being cautious. Example can be referenced from the previous global financial crisis because the financial mismanagement affected a lot of multinational companies that collapsed and filed for bankruptcy. This is for the reason that their financial issues were sucked by the regressing investments with the government. The stock market that was declining simultaneously around the world was the main indicator of the global economy, which collapsed that led into worldwide financial depression according to Besley (2011).
Operating segment
Apple Inc.’s cash instruments are the first method that aims to determining transferable assets such as deposits and loans to become feasible. The performance of cash instrument is essential to manipulate transfer prices when moving manufactured commodities towards different branches in different nations. It regulates financial accounting are being done to assess the profits that are being made by subsidiaries to assess the movement of sales, the selling price, production per cost and the operating expenditures that are significant for the operation to identify its benefits for its profits. William (2003) indicated that this complies with the standards of accounting regulation that follows the flow of the company’s house rules together with the basis of the international and national laws in regulating accounting finances to sort out appropriate pricing, tax expenditures and financial outputs without violating the regulations. Daily management of subsidiary as a form of marketing segmentation to a particular area reduces the dependency of a certain branch from its parent headquarter and this regulation will be able to increase all of the company’s competitiveness and it also increases its business performance according to the policies existing within a particular locality. Application of employment standards as part of the marketing segmentation standards is highly essential such as exercising collective labor and individual labor law protecting employee’s right and providing acceptable conditions under the contract between operating employees and contractors.
Toshiba’s derivative instrument is another financial risk management operation that aims to provide segmentation that seeks to retain assets, funds for its productivity expenditures and to maintain supplementing alternative funds to back up its assets. Abeles (2006) indicated that access to credit emphasized the concept of directing to exchange of goods and services that are significant on its process of production. Trust are being built to access of credits allowing the branches of a certain enterprise to provide its resources of financial assets to other branch in form of a debt to support and save the operational activity within the structures of the enterprise. Regarding the impact of business, Schermerhorn (2009) stated that profitability, appropriates on the delivery of knowledge, efficiency in the promotion of management approach, and highly analyzed and studied decisions regarding marketing strategy are significant to the promotion of profits and increase its assets enabling to decrease debts to other enterprises that helps edible arrangement capacity to increase their financial productivity.
Implication
It has been learned that the implication of financial management is important because it seeks to reduce risks that can be experienced by involved companies such as Apple Inc., and Toshiba. They are multinational companies whose financial management are playing an important role to regulate their assets and liabilities. Cash instruments and derivative instruments provide an essential role in order to secure the financial regulation of the company’s assets and financial integrity. Risk management’s regulation on its access to credits line models within a multination corporation obtain committed credit lines to various insurances which provide additional funds for emergency purposes and to support the financial outflows for protecting cash flows. Access of credits are being made by financial creditors as a corporation that issues credits that is not only for multinational corporation but also for other private and public financial institutions to finance projects and baking up assets. This is significant for help protecting the corporation’s credit integrity for avoiding some risks that would lead to financial loses, credit imbalances, and wasting of expenses that will have a negative impact to the financial capacity of the enterprise as mentioned by Baker (2011).
