CorporateMetrics Methodology Application for the Market Risk Quantification in the Multinational Company

Abstract

In the context of globalization, as the opportunities faced by multinational companies increase, financial risks increase the financial fragility for companies. Under the influence of the risks in overseas markets, the company's decision-making will have more complex changes. Therefore, the measurement of risk has become an indispensable part of company decision-making. This thesis uses the historical data from 2015 - 2019 to quantify the risk of exchange rate fluctuations to the company. Then we will predict the net operating income of Haier Company in 2020 through the CorporateMetrics methodology. Chapter 1 is the introduction. Chapter 2 mainly introduces the CorporateMetrics method, including the financial model used in Chapter 4. The purpose is to predict some indicators for 2020. The principle and process of the prediction method will be described. Chapter 3 introduces some basic information of Haier Company, including the company's strategy and financial situation. And we will use PEST analysis and SWOT analysis to analyze the company's internal and external conditions. Chapter 4 is the application of Chapter 2. Based on the annual report from 2015 to 2019, we will predict the total operating income in 2020 and make a probability distribution diagram for analysis. We will use the data in Haier's income statement to predict total operating costs in 2020. Based on the above, we will predict the net operating profit in 2020. Finally, we assume the sensitivity analysis of changes in operating income to the probability distribution of net operating income. Chapter 5 is a summary of the thesis.