Item 7A. Quantitative and Qualitative Disclosures About Market Risk. INTEREST RATE RISK FOREIGN CURRENCY EXCHANGE RISK Nordstrom, Inc. and subsidiaries 35 Dollars in millions We are exposed to interest rate risk primarily from changes in short-term interest rates. As of January 31, 2015, we had cash and cash  equivalents of $827, which generate interest income at variable rates, and gross credit card receivables of $2,284, which generate finance  charge income at a combination of fixed and variable rates. Interest rate fluctuations can affect our interest income, credit card revenues and  interest expense. See Note 3: Accounts Receivable in Item 8: Financial Statements and Supplementary Data for additional information. We use sensitivity analyses to measure and assess our interest rate risk exposure. For purposes of presenting the potential earnings effect  of a reasonably possible hypothetical change in interest rates from our reporting date, we utilized two sensitivity scenarios: (i) linear growth of  approximately 225 basis points over the year and (ii) linear decline of approximately 15 basis points over the year, due to the fact that current  interest rates are near historically low levels. Other key parameters and assumptions in our sensitivity analyses include the average cash and  cash equivalents balance, average credit card receivables balance and no new floating rate debt. The first hypothetical scenario would result  in an approximate $15 increase in future earnings, while the second hypothetical scenario would not have a material effect on future  earnings. For our long-term fixed-rate debt of $3,131, our exposure to interest rate risk is limited to changes in the fair value of our debt. As our debt is  primarily fixed-rate, changes in interest rates do not impact our cash flows. However, changes in interest rates increase or decrease the fair  value of our debt, depending on whether market rates are lower or higher than our fixed-rates. As of January 31, 2015, the fair value of our  fixed-rate debt was $3,693. See Note 8: Debt and Credit Facilities and Note 9: Fair Value Measurements in Item 8: Financial Statements and  Supplementary Data for additional information. The majority of our revenues, expenses and capital expenditures are transacted in U.S. Dollars. Our U.S. operation periodically enters into  merchandise purchase orders denominated in British Pounds or Euros. From time to time, we may use forward contracts to hedge against  fluctuations in foreign currency prices. As of January 31, 2015, our outstanding forward contracts did not have a material impact on our  consolidated financial statements. As of January 31, 2015, we have opened one full-line store in Canada and have announced plans to open five additional full-line stores in  Canada over the next few years. The functional currency of our Canadian operations is the Canadian Dollar. We translate assets and  liabilities into U.S. Dollars using the exchange rate in effect at the balance sheet date, while we translate revenues and expenses using a  weighted-average exchange rate for the period. We record these translation adjustments as a component of accumulated other  comprehensive loss on the Consolidated Balance Sheets in Item 8: Financial Statements and Supplementary Data. Our Canadian operations  enter into merchandise purchase orders denominated in U.S. Dollars for approximately half of its inventory. As sales in Canada are  denominated in the Canadian Dollar, gross profit for our Canadian operations can be impacted by foreign currency fluctuations.  In addition, our U.S. operations incurred certain expenditures denominated in Canadian Dollars and our Canadian operations incurred certain  expenditures denominated in U.S. Dollars. This activity results in transaction gains and losses that arise from exchange rate fluctuations and  are recorded as gains or losses in the Consolidated Statements of Earnings in Item 8: Financial Statements and Supplementary Data. As of  January 31, 2015, activities associated with foreign currency exchange risk have not had a material impact on our consolidated financial  statements.