Financial Instrument And Corporate Cost Management

The enterprise faced a variety and diversifies risk. Therefore, the traditional risk management is not able to satisfy the enterprise needs of risk management.In order to meet the management control needs, using the financial instrument to manage the risk is part of the main duties. The use of derivative products to carry out the commodity and future price risk hedging, take the price risk as the management object and the varieties financial derivation product as management tool as well as the enterprise value maximization is the management goal.This article carries out a research on the price undulation and fluctuation of exchange rate of main raw material-copper of the enterprise.We found that traditional risk control on the price undulation and fluctuation of exchange rate of main raw material-copper is no longer effectiveness. However, we concluded that the use of derivative products to carry out the commodity and future price risk hedging and foreign exchange rate hedging is an effective method to manage the operation cost as well as profit maximization.The proposes revelatory conclusion : The enterprise based the operational management, reasonably used the financial instrument in order to perform the product management risk as well as to sets up the concept of "fixed cost" and "guarantees price". This can make the enterprise control the future by their action on the management risk.