Coach's Case Summary

As exchange rates change over time, companies are required to recognize both gains and losses on certain transactions or obligations. To estimate the impact of exchange rates on the net income of a company the foreign exchange ratio is used. Foreign currency ratio is the relationship of foreign currency gain or loss and net income (Foreign currency gain/loss/ net income). Since, Coach’s international subsidiaries primarily use local currencies as the functional currency and translate their financial results from the local currency to U.S. dollars, no foreign currency gain or loss has been recorded. This is done to decrease the risk of foreign currency fluctuation on company’s net operating income.
As mentioned in M& D disclosures, the Company is also exposed to market risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which are not long term in investment nature To manage the exchange rate risk related to these loans, the Company primarily enters into forward exchange and cross-currency swap contracts. As of June 27, 2015 the total notional values of outstanding forward foreign currency exchange and cross-currency swap contracts related to these loans were $25.8 million. …show more content…
owns the largest share of the $21 billion baby and young children’s apparel market (ages zero to seven) in the United States as well as the $2 billion market in Canada. The two of the best known and trusted brand names in young children’s apparel, Carter’s and OshKosh B’gosh belong to Carter’s Inc.. Both of these iconic brands have more than 100 years of rich history; Carter’s was established in 1865 and OshKosh B’Gosh in 1895. The brand has the broadest distribution of young children’s apparel in the market. In 2015, their multi-channel business model generated $3.0 billion in net sales. (Carter’s 2015, page