●  CDW Corp · FY 2022 

Market Risk

Exposure to fluctuating interest rates from variable debt and translation risk from international transactions are noted areas of market concern. However, the available disclosure lacks crucial quantitative measures, such as Value-at-Risk or sensitivity tables, needed to precisely assess the magnitude of these risks. This absence makes it impossible to fully gauge a company’s vulnerability across its financial portfolio.

CDW L1 Synthesis
●  SYMBOLOGY.ONLINE l1 SYNTHESIS 

Cdw Corp Market Risk Synthesis

Market Risk Exposure Assessment: CDW Corp (2022-12-31)

Interest Rate Sensitivity

The company is exposed to fluctuations in interest rates due to floating rate structures on its senior unsecured revolving loan facility and senior unsecured term loan facility.

Magnitude of Exposure and Mitigation
  • Exposure: The primary exposure stems from the variable nature of debt financing.
  • Mitigation Strategies (Strengths): CDW employs a dual strategy: managing risk through the overall proportion of fixed-rate versus variable-rate debt in its portfolio, and occasionally utilizing derivative instruments specifically to manage interest rate changes on variable-rate facilities.
  • Weaknesses: The disclosure lacks quantitative measures such as duration or specific ratios detailing the current mix of fixed vs. variable debt, making it impossible to assess the precise magnitude of sensitivity.

Foreign Currency Exposure

CDW transacts internationally in British pounds (GBP) and Canadian dollars (CAD), exposing the company to exchange rate fluctuations.

Magnitude of Exposure and Mitigation
  • Exposure: The risk is primarily translation risk, as international operating subsidiaries use local currencies as their functional currency, meaning consolidated results must be translated back into USD.
  • Mitigation Strategies (Strengths): The direct effect of foreign currency fluctuations on the company's results of operations has been reported as non-material because the majority of its operational results are denominated in US dollars. This suggests a natural hedge or limited exposure impact.
  • Weaknesses: While the material impact is low, the filing does not disclose specific hedging instruments (e.g., forward contracts) used to mitigate potential translation risks associated with GBP and CAD transactions.

Commodity Price Risk

No information regarding commodity price risk was provided in the disclosed market risk section. Therefore, no assessment of exposure or mitigation strategies can be made based on this document.

Equity Price Risk

No information regarding investment portfolio exposure or mark-to-market impacts from equity price fluctuations was provided in the disclosed market risk section. Therefore, no assessment of exposure or mitigation strategies can be made based on this document.

Quantitative Measures

The filing did not disclose any specific quantitative measures related to market risk, such as Value-at-Risk (VaR), sensitivity tables, or results from stress testing.