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Ferro's Company Risks Case Study

Essay by   •  April 24, 2011  •  Case Study  •  527 Words (3 Pages)  •  1,846 Views

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* Unpredictable/Cyclical Demand

o Macroeconomics

o Uncertainty in Credit Markets

* Uncertainty in development of solar Market

* Risk of not maintain competitive operations

* Implementation of new information technology processes

* Availability/Cost of raw materials and supplies

* Currency conversion rates

* Growth (Asia Pacific)

* Write down of Intangible assets

* Variable interest rates

* Liens

* Restrictive covenants

* Acts of God/Terrorists

* Credit market uncertainty

* Employee benefit costs

* Regulatory authorities

* New product launches

* Limited/No Redundancy to operations (Damages)

* Future Acquisitions

* Deferred Tax Asset Utilization

* Price Competition

* IP rights

* EHS

* Labor & Employee Laws

* Implementation of Restructuring

* Lawsuits

The following analysis outlines an overview of Ferro's company risks and then focuses on two key risks: cash management and the Electronic Materials Solar business risks for detailed analysis. As a larger company, Ferro faces several business risks, treasury risks, organizational risks and procurement risks, which are briefly discussed in this paper.

As to cash management, since the global recession in late 2008, Ferro has struggled to have sufficient cash for its daily operations. During the years2009 and 2010, the company made multiple efforts to manage its cash flow on a daily basis in order to ensure the continuation of its normal business. From an operating activities perspective, the company implemented specific targets to manage its working capital. Additionally the company manages its cash through an AR securitization program and a Credit Facility. As a result of analysis performed on the company's current cash management process, several recommendations are made. These include renegotiating the receivable securitization program to have the borrowing limit fluctuate with the cyclical cash demand, having each foreign operation establish a bank account with one global bank to further its cash concentration process,

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