Question

Given the nature of Levi's business, discuss whether (or not) you expect the company is affected by currency exchange rates.

Answer 1

Levi's business is exposed to clothing segment and it is also exposed across the globe because it is a multinational company and it has it's branches all across the globe so it is highly affected by the fluctuation of the currency exchange rate because when there would be a change in the currency of various countries in respect to the domestic currency, it would mean that Levi's will be having to record the effect of the change of the currency into the books of accounts and that will impact the overall profits of the company.

Levi's is a multinational company which has subsidiaries and branches across different nations and when there would be a changes in the exchange rate between various Nations, it would mean that transaction risk along with translation risk along with operational risk are highly embedded into the operations of Levi's so these risks are to be properly managed in order to sustain & survive in the longer period of time and maximize the profits by operating in the global economy.

It will always be impacted by the exchange rates because it has a large number of operational activities through subsidiaries and branches in other countries and these exchange rate fluctuations are to be accounted into the books of accounts and they will be reducing the overall profits of the company and they these fluctuations need to be properly managed through hedging and they will be trying to engage into better transactions which has better risk management so that they can maximize their profit.