Risks
The chief risks and reservations Saputo is prone to are mentioned in this report. The risk factors innate to Saputo’s operations will be evaluated and appropriate measures suggesting risk management strategies to mitigate them will be outlined. While risk management is part of the company’s functioning and tactical decisions, it does not assure that unanticipated happenings will not follow and in turn possess the risk of adversely upsetting the company’s fiscal state.
1. SOURCE OF INGREDIENTS
Saputo procures raw materials that signify up to 85% of the total cost of goods. It sells the treated raw materials into eatable goods to a wide assortment of consumers both domestically and internationally. Accessibility of raw materials as well …show more content…
Other factors influencing the prices include, the health of the economy, supply and demand rates for dairy products in the industry-wide context. Frequent variations in the prices can affect the company’s performance and it’s financial position. Implementing strategies aiming to reduce such instabilities can strengthen their economic state.
3. MERGING OF CLIENTELE
Food industry overall, has consolidated tremendously over the past few years, covering all market fragments. As Saputo serves these market fragments, the merging of businesses in the industry has led to a reduction in the number of customers and an upsurge in the comparative significance of some clients. One consumer signified more than 10% of total combined sales for fiscal year 2014, with 11.4 %( see appendix). Saputo’s facility to continue servicing its customers in all the markets will be contingent on the superiority of its foodstuffs and amenities as well as its worth.
4. RISK OF …show more content…
Financial statements and credit checks are taken into consideration, for creating an allowance for bad debts. Due to its large and highly assorted customer base active in all segments, Saputo has low exposure to credit risk in terms of accounts receivable. None of it’s accounts receivable surpass 10% of the accounts receivable (total) as stated in its financial statements of 2014 (appendix). Saputo apprises its evaluations of the allowance of doubtful debts by overseeing collection developments from the past accounts.
5. EXPOSURE- FINANCIAL RISK
Saputo has financial risk disclosure in huge amounts linked to the money exchange of each of the countries where it functions. Roughly 40% of sales are recognized in Canada, 49% in the US, and 11% worldwide. Debt denominated in foreign currencies is hedged naturally against the exchange rate risks from the cash flows arising from foreign countries in which Saputo operates. It hinges on Saputo’s capability to uphold this natural hedge and equal the financial risk exposure related to foreign currencies.
6. PROTECTION FROM TARIFF AND
The chief risks and reservations Saputo is prone to are mentioned in this report. The risk factors innate to Saputo’s operations will be evaluated and appropriate measures suggesting risk management strategies to mitigate them will be outlined. While risk management is part of the company’s functioning and tactical decisions, it does not assure that unanticipated happenings will not follow and in turn possess the risk of adversely upsetting the company’s fiscal state.
1. SOURCE OF INGREDIENTS
Saputo procures raw materials that signify up to 85% of the total cost of goods. It sells the treated raw materials into eatable goods to a wide assortment of consumers both domestically and internationally. Accessibility of raw materials as well …show more content…
Other factors influencing the prices include, the health of the economy, supply and demand rates for dairy products in the industry-wide context. Frequent variations in the prices can affect the company’s performance and it’s financial position. Implementing strategies aiming to reduce such instabilities can strengthen their economic state.
3. MERGING OF CLIENTELE
Food industry overall, has consolidated tremendously over the past few years, covering all market fragments. As Saputo serves these market fragments, the merging of businesses in the industry has led to a reduction in the number of customers and an upsurge in the comparative significance of some clients. One consumer signified more than 10% of total combined sales for fiscal year 2014, with 11.4 %( see appendix). Saputo’s facility to continue servicing its customers in all the markets will be contingent on the superiority of its foodstuffs and amenities as well as its worth.
4. RISK OF …show more content…
Financial statements and credit checks are taken into consideration, for creating an allowance for bad debts. Due to its large and highly assorted customer base active in all segments, Saputo has low exposure to credit risk in terms of accounts receivable. None of it’s accounts receivable surpass 10% of the accounts receivable (total) as stated in its financial statements of 2014 (appendix). Saputo apprises its evaluations of the allowance of doubtful debts by overseeing collection developments from the past accounts.
5. EXPOSURE- FINANCIAL RISK
Saputo has financial risk disclosure in huge amounts linked to the money exchange of each of the countries where it functions. Roughly 40% of sales are recognized in Canada, 49% in the US, and 11% worldwide. Debt denominated in foreign currencies is hedged naturally against the exchange rate risks from the cash flows arising from foreign countries in which Saputo operates. It hinges on Saputo’s capability to uphold this natural hedge and equal the financial risk exposure related to foreign currencies.
6. PROTECTION FROM TARIFF AND