ASPEN TECHNOLOGIES CASE QUESTIONS: 1. IDENTIFY ASPEN TECHNOLOGIES MAIN EXCHANGE RATE EXPOSURES. EXPLAIN HOW ASPEN TECHNOLOGIES’ BUSINESS STRATEGY GIVES RISE TO THESE EXPOSURES AS WELL AS TO THE FIRM’S FINANCING NEEDS. 2. CALCULATE ASPEN’S EXPOSURE FOR TH
Identify Aspen Technologies main exchange rate exposures. Explain how Aspen Technologies’ business strategy gives rise to these exposures as well as to the firm’s financing needs.
Calculate Aspen’s exposure for the past year. Identify whether the firm is long or short for each currency exposure.
Recommend a currency risk management program for Aspen Technology.
The Excel file:
Aspen Technology, Inc.:
Currency Hedging Review
In October 1995, Mary Palermo, senior vice president and chief financial officer of Aspen
Technology, Inc. (AspenTech), was reviewing her notes from a recent meeting at which a number of
new currency hedging techniques had been presented. While some of the ideas that had been
discussed were intriguing to Palermo, she knew that these choices could only be made in a broader
context. AspenTech, with headquarters in Cambridge, Massachusetts, developed and marketed
simulation software for customers in process manufacturing industries in over 30 countries. In 1995,
52% of AspenTech’s software license revenues came from customers outside the United States. With
most, but not all, of its expenses incurred in the United States, and a material fraction of its sales
abroad in yen, pound sterling, and DM, AspenTech had long been exposed to currency fluctuations.
Through a disciplined currency hedging program, it chose to eliminate virtually all of the exposure