What is Forward Contract Assignment Help Services Online?
Forward contract assignment help services online refer to academic assistance provided to students who need help with understanding and completing assignments related to forward contracts. A forward contract is a financial derivative that involves an agreement between two parties to buy or sell a particular asset, such as a commodity, currency, or financial instrument, at a predetermined price on a specified future date.
Forward contracts are commonly used to hedge against price fluctuations, speculate on future prices, or lock in prices for future transactions. However, understanding the intricacies of forward contracts can be complex, requiring knowledge of financial markets, risk management, and mathematical models. Therefore, online assignment help services cater to students who may struggle with grasping the concepts, theories, and calculations related to forward contracts.
These services are typically offered by experienced professionals who possess in-depth knowledge of financial derivatives, including forward contracts. They provide plagiarism-free write-ups that are customized to meet the specific requirements of the students’ assignments. These write-ups may include explanations of concepts, step-by-step solutions to problems, and examples to aid in understanding. The aim of forward contract assignment help services online is to assist students in comprehending the intricacies of forward contracts, enabling them to excel in their academic pursuits. All work is original and free from plagiarism to ensure academic integrity.
Various Topics or Fundamentals Covered in Forward Contract Assignment
The cash conversion cycle (CCC) is a key metric used in financial management that measures the efficiency of a company’s working capital management. It represents the time it takes for a company to convert its investments in inventory and receivables back into cash, while considering the time it takes to pay its payables. Assignments related to the cash conversion cycle typically cover various topics and fundamentals, including:
Inventory Management: Inventory management is a critical component of the CCC as it directly affects the company’s cash flow. Efficient inventory management helps in reducing the holding period of inventory, which in turn reduces the amount of capital tied up in inventory. This topic may cover concepts such as just-in-time (JIT) inventory management, economic order quantity (EOQ), and reorder point analysis, among others.
Accounts Receivable Management: The management of accounts receivable, including credit terms, collection period, and credit policy, is another important aspect of the CCC. This topic may explore different credit evaluation techniques, credit terms negotiation, and strategies for managing accounts receivable to reduce the collection period and improve cash flow.
Accounts Payable Management: Accounts payable management involves managing the company’s payments to suppliers and creditors. This topic may include concepts such as payment terms negotiation, early payment discounts, and strategies for optimizing accounts payable to extend payment periods and improve cash flow.
Cash Flow Management: Cash flow management is a fundamental topic covered in CCC assignments as it involves understanding the inflow and outflow of cash in a company. This may include cash flow forecasting, cash flow statement analysis, and strategies for improving cash flow through efficient working capital management.
Working Capital Financing: Financing working capital is crucial for businesses, and CCC assignments may cover different financing options such as short-term loans, lines of credit, and trade credit. This topic may explore the cost of capital, risk assessment, and strategies for optimizing working capital financing to minimize costs and maximize profitability.
CCC Analysis and Interpretation: CCC assignments may also involve analyzing and interpreting the CCC of a company to assess its financial health and operational efficiency. This may include calculating and interpreting key CCC ratios, such as the days inventory outstanding (DIO), days sales outstanding (DSO), and days payable outstanding (DPO), to evaluate a company’s cash conversion cycle performance and compare it with industry benchmarks.
CCC Optimization Strategies: Finally, CCC assignments may explore various strategies and recommendations for optimizing the cash conversion cycle of a company. This may include identifying areas of improvement in inventory management, accounts receivable management, and accounts payable management, and proposing strategies to streamline operations, reduce costs, and improve cash flow.
In conclusion, cash conversion cycle assignments cover a wide range of topics and fundamentals related to working capital management, including inventory management, accounts receivable management, accounts payable management, cash flow management, working capital financing, CCC analysis and interpretation, and CCC optimization strategies. It is important to ensure that any written assignments are free from plagiarism and properly cite any sources used to maintain academic integrity.
Explanation of Forward Contract Assignment with the help of Ford by showing all formulas
A forward contract is a type of financial derivative that allows two parties to agree on a future transaction, typically involving the purchase or sale of an underlying asset, at a predetermined price and date. In this case, let’s assume Ford is looking to purchase steel to manufacture car parts, and it wants to lock in a price to protect against potential price increases in the future. Ford enters into a forward contract with a steel supplier to buy steel at a fixed price on a specified future date.
Let’s break down the components of a forward contract:
Underlying Asset: In this example, the underlying asset is steel, which Ford intends to purchase to manufacture car parts.
Forward Price: This is the agreed-upon price at which Ford will purchase steel from the steel supplier in the future. Let’s say Ford and the steel supplier agree on a forward price of $1,000 per ton of steel.
Contract Size: This refers to the quantity of the underlying asset that Ford is obligated to purchase. Let’s assume the contract size is 1,000 tons of steel.
Delivery Date: This is the date on which Ford is obligated to take delivery of the steel from the steel supplier. Let’s assume the delivery date is six months from the date the contract is entered into.
Initial Margin: This is the initial deposit that Ford needs to make to the steel supplier to enter into the forward contract. It serves as collateral and is usually a percentage of the total contract value. Let’s assume the initial margin requirement is 10% of the total contract value.
Now, let’s calculate the initial margin, total contract value, and Ford’s obligation under the forward contract:
Initial Margin = 10% x Contract Size x Forward Price
Initial Margin = 10% x 1,000 tons x $1,000/ton
Initial Margin = $100,000
Total Contract Value = Contract Size x Forward Price
Total Contract Value = 1,000 tons x $1,000/ton
Total Contract Value = $1,000,000
Ford’s Obligation = Contract Size x Forward Price
Ford’s Obligation = 1,000 tons x $1,000/ton
Ford’s Obligation = $1,000,000
So, Ford would need to deposit an initial margin of $100,000 with the steel supplier to enter into the forward contract. The total contract value is $1,000,000, and Ford’s obligation under the contract is also $1,000,000.
Now, let’s consider what happens if the price of steel increases before the delivery date. If the price of steel rises to $1,200 per ton, Ford would benefit from the forward contract because it locked in a lower price of $1,000 per ton. Ford can purchase steel at the lower forward price of $1,000 per ton and sell it in the market at the higher spot price of $1,200 per ton, resulting in a profit of $200 per ton.
On the other hand, if the price of steel decreases to $800 per ton, Ford would face a loss because it is obligated to purchase steel at the higher forward price of $1,000 per ton. However, Ford would still need to fulfill its obligation under the forward contract and purchase the steel at the agreed-upon forward price of $1,000 per ton.
In conclusion, a forward contract is a useful tool for companies like Ford to hedge against price fluctuations in the market for underlying assets such as steel. By entering into a forward contract, Ford can lock in a specific price for steel, providing certainty and protection against potential price increases.
It’s important to note that forward contracts are typically not traded on an exchange and are customized agreements between two parties. As such, they carry certain risks, including counterparty risk, as Ford relies on the steel supplier to fulfill their obligation under the contract, and market risk, as the price of the underlying asset may change in a way that impacts the profitability of the contract.
Forward contracts can also be assigned to a third party. For example, if Ford wishes to transfer its obligation under the forward contract to another party, it can assign the contract to them. The assignment of a forward contract involves the original parties to the contract (Ford and the steel supplier) and the assignee (the third party who is taking over the contract).
The formula for calculating the assignment price of a forward contract is as follows:
Assignment Price = Forward Price ± Mark-to-Market (MTM) Value
The Mark-to-Market (MTM) value is the difference between the current spot price of the underlying asset and the forward price, multiplied by the contract size. It represents the profit or loss that would be incurred if the contract were closed at the current market price. If the MTM value is positive, it represents a profit, and if it is negative, it represents a loss.
For example, if the current spot price of steel is $1,100 per ton and Ford’s forward contract has a forward price of $1,000 per ton, the MTM value would be $100,000 ($100 per ton x 1,000 tons). If Ford wishes to assign the forward contract to a third party, it can do so by negotiating an assignment price that takes into account the forward price and the MTM value.
It’s important to note that assignment of forward contracts may require the consent of the counterparty and may be subject to terms and conditions specified in the original contract. Additionally, the assignee would also need to fulfill the margin requirements and other obligations of the original contract.
In conclusion, forward contract assignment allows parties like Ford to transfer their obligations under a forward contract to another party. The assignment price is calculated based on the forward price and the Mark-to-Market (MTM) value, representing the current profit or loss on the contract. However, it’s important to carefully review the terms and conditions of the original contract and seek professional advice before assigning a forward contract to ensure compliance with legal and financial requirements.
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