A company buys product from a supplier in an economically unstable foreign country. The supplier's product is excellent, and the firm offers unusually favorable credit terms under which payment isn't required until 90 days after goods are received. Unfortunately the exchange rate for the country's currency varies as much as 25% in a few months' time. Explain why the company's CFO might be reluctant to take advantage of these terrific credit terms. Assume forward contracts on the currency are not available.

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The Answer of A company buys product from a supplier in an economically unstable foreign country. The supplier's product is excellent, and the firm offers unusually favorable credit terms under which payment isn't required until 90 days after goods are received. Unfortunately the exchange rate for the country's currency varies as much as 25% in a few months' time. Explain why the company's CFO might be reluctant to take advantage of these terrific credit terms. Assume forward contracts on the currency are not available.

A Company Buys Product from a Supplier in an Economically