Question

The company lost a great deal of its worth when it was forced to write down its U.K. assets after a few years of operation. What could the team have done to mitigate this risk?

Answer 1

When the company was forced to write down the United Kingdom assets, then the company could have done risk mitigation strategies by taking proper exposure into the foreign markets through foreign currency exchanges and hedge the risk of exposure in United Kingdom to a large extent.

The company could also have looked at potential merger and combination strategy which have helped in order to combine with the local business in order to provide it with the competitive ability to do not liquidate from the United Kingdom market.

They could have also provided these Assets on lease and lease payments would have also benefited the company as lease payments would have helped the company to get proper and regular payments in form of of minimum lease payments and they can either into enter into a financial lease or operating lease so it would have helped the business in order to save their overall cost and not liquidate their business completely by writing down the assets.

The company could have also readjusted with the remaining life of the Asset and not write them down and it would have expected with the lower salvage value as well.