Assignment #5 Updated
Use the companion Excel spreadsheet as a template to do this assignment. When you are finished, UPLOAD your Excel spreadsheet into Blackboard.
As Treasurer, you are responsible for ensuring adequate funding of trading activity. Therefore, new deals require your approval before traders execute. Currently, you have funding capacity of $180MM to fund trades and unexpected cash needs. Below is a portfolio of trades awaiting approval to execute. Decide which trades you will approve in order to obtain the most profitable position for your company while staying within limits and adhering to policies.
- The best way to begin the analysis would be to set up columns with the 5 trades and the capital needed each day. (See the companion Excel spreadsheet.) Then calculate the total funding needed each day if you did all 5 trades.
- If you can do all 5 trades and not exceed your funding limits, you are done and should fund all 5 trades. On the other hand, if you exceed your limits, figure out which combination of trades would give you the highest expected profit without going over your limit (i.e. is it trades 1,2,3,4 or 2,3,4,5 or 1,2,4,5 or 1,2,3,5 or 3,4,5?).
Deal 1: Buy Naphtha cargo from USGC, ship to Europe, and sell at destination
Cash Out 10/28/2021 Cash needed per day $16MM
Cash In 11/17/2021 Expected Profit $0.5MM
Cash Timeframe 20 days
Deal 2: Buy Jet cargo in USGC and sell in Latin America
Cash Out 10/28/2021 Cash needed per day $30MM
Cash In 11/7/2021 Expected Profit $0.2MM
Cash Timeframe 10 days
Deal 3: Buy Fuel Oil cargo in Europe, ship product to Singapore, and sell at destination
Cash Out 10/10/2021
Cash In 12/29/2021
Cash Timeframe 80 days
Cash needed per day $58MM
Expected Profit $2.0MM
Deal 4: Buy Fuel Oil cargo in Europe, ship product to Singapore, and sell at destination
Cash Out 9/21/2021 Cash needed per day $67MM
Cash In 11/20/2021 Expected Profit $1.4MM
Cash Timeframe 60 days
Deal 5: Buy Crude Oil inventory, store on ship for 4 months, and sell in Asia
Cash Out 10/1/2021 Cash needed per day $70MM
Cash In 1/24/2022 Expected Profit $3.0MM
Cash Timeframe 115 day
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