Country’s foreign exchange rates and how those rates could impact Walmart’s future financial performance.

Sample Solution

Foreign exchange rates and Walmart's future financial performance Foreign exchange rates can have a significant impact on Walmart's future financial performance. If the value of the Kenyan shilling (KES) depreciates against the US dollar (USD), then Walmart's costs in Kenya will increase. This is because Walmart will have to pay more KES to buy USD, which is the currency it uses to import goods and pay for other expenses. On the other hand, if the value of the KES appreciates against the USD, then Walmart's costs in Kenya will decrease. This is because Walmart will be able to buy more USD with its KES, which will lower its import costs and other expenses. In addition to the direct impact on costs, foreign exchange rates can also have an indirect impact on Walmart's financial performance. For example, if the value of the KES depreciates, then Kenyan consumers may have less purchasing power, which could lead to lower sales for Walmart. Other factors that could impact Walmart's financial performance In addition to foreign exchange rates, there are other factors that could impact Walmart's financial performance in Kenya. These include:

• Interest rates: If interest rates in Kenya rise, then Walmart's borrowing costs will increase. This could lead to lower profits and higher debt levels.
• Balance of payments: If Kenya's balance of payments deteriorates, then the government may impose capital controls or other restrictions that could make it more difficult for Walmart to operate in the country.
• Government policies: The Kenyan government could introduce policies that favor domestic businesses over foreign companies. This could make it more difficult for Walmart to compete in the Kenyan market.
• Taxes and tariffs: The Kenyan government could increase taxes or tariffs on imported goods. This would increase Walmart's costs and could lead to lower profits.

Managing foreign exchange risk Walmart can use a variety of strategies to manage foreign exchange risk. These include:

• Hedging: Walmart can use forward contracts or other hedging instruments to lock in the exchange rate for future transactions. This will protect Walmart from losses if the value of the KES depreciates.
• Diversification: Walmart can expand its operations into other countries, which will reduce its exposure to any one currency.
• Currency risk management software: Walmart can use currency risk management software to track its exposure to foreign exchange risk and to identify potential risks.

Political risk and its impact to the financials Political risk is the risk that political events or actions could negatively impact Walmart's business operations. This could include events such as government instability, civil unrest, or changes in trade policy. Political risk can have a significant impact on Walmart's financial performance. For example, if there is a coup d'état in Kenya, then Walmart's stores could be closed and its employees could be put in danger. This could lead to significant losses for Walmart. Funding for expansion Walmart can fund its expansion into Kenya through a variety of sources, including:

• Debt: Walmart can borrow money from banks or other lenders.
• Equity: Walmart can issue new shares to investors.
• Internal funds: Walmart can use its own cash flow to fund the expansion.

The best funding source for Walmart will depend on a number of factors, including the cost of debt, the availability of equity, and Walmart's own cash flow. Conclusion Foreign exchange rates, interest rates, balance of payments, government policies, taxes and tariffs, political risk, and funding are all important factors that could impact Walmart's future financial performance in Kenya. Walmart can use a variety of strategies to manage these risks and to ensure that its expansion is successful.