Relative to the gross margins the subsidiaries report in local currency, Romulus’s consolidated gross margin most likely :A . will not be distorted by currency translations.B . would be distorted if Augustus were using the same translation method as Julius.C . will be distorted because of the translation and inventory accounting methodsAugustus is using

Relative to the gross margins the subsidiaries report in local currency, Romulus’s consolidated gross margin most likely :A . will not be distorted by currency translations.B . would be distorted if Augustus were using the same translation method as Julius.C . will be distorted because of the translation and inventory accounting methodsAugustus is using

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter12: Managing Economic Exposure And Translation Exposure

Section: Chapter Questions

Problem 4ST

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Given Ruiz’s belief about the direction of exchange rates, Eurexim’s gross profi t marginwould be highest if it accounts for the Ukraine subsidiary’s inventory using:A . FIFO and the temporal method.B . FIFO and the current rate method.C . weighted-average cost and the temporal method
Give typing answer with explanation and conclusion Which of the following is an example of foreign exchange risk for an MNC? a. Foreign subsidiary of the MNC may face higher tarriffs b. Foreign subsidiary of the MNC may have to pay higher taxes c. Foreign subsidiary of the MNC may make less sales due to weak foreign currency d. Foreign subsidiary of the MNC may make less sales due to lower consumer income
Which of the following statements is true for the translation process using the current rate method? Choose the correct.a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the historical exchange rate in effect at the date of its purchase.c. A translation adjustment is created by the change in the relative value of a subsidiary’s monetary assets and monetary liabilities caused by exchange rate fluctuations.d. A translation adjustment is created by the change in the relative value of a subsidiary’s net assets caused by exchange rate fluctuations.
Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful Accounts
Which of the following statements is true for the translation process using the current rate method?a. A translation adjustment can affect consolidated net income.b. Equipment is translated at the historical exchange rate in effect at the date of its purchase.c. A translation adjustment is created by the change in the relative value of a subsidiary’s monetary assets and monetary liabilities caused by exchange rate fluctuations.d. A translation adjustment is created by the change in the relative value of a subsidiary’s net assets caused by exchange rate fluctuations.
The foreign subsidiary of a U.S. firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S. dollars. This is an example of which one of the following? A. Interest rate disparities B. Short-run exposure to exchange rate risk C. Long-run exposure to exchange rate risk D. Political risk associated with the foreign operations E. Translation exposure to exchange rate risk
A U.S. parent owns a subsidiary in France, the subsidiary's accounts are maintained in euros, and its functional currency is the U.S. dollar. During the year, the euro has weakened against the U.S. dollar (U.S.$/€ rate has declined).Which one of the subsidiary's transactions below increases the amount of remeasurement losses reported when the subsidiary's accounts are translated to U.S. dollars?Select one:A. Inventory purchasesB. Depreciation expenseC. Sale of equity securitiesD. Sales revenue Plz answer fast without plagiarism.
Which of the following statements is CORRECT? A. Foreign exchange dealers earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase. B. Training Speculators earn a profit by a bid - ask spread on currencies they purchase and sell. C. Currency trading lacks profitability for large commercial and investment banks but is maintained as a service for corporate and institutional customers. D. Arbitragers seek to profit from simultaneous exchange rate differences in different markets.
Which is the most simple way that is able to protect a U.S firm's earnings of its consolidated income statement in the depreciation of euro relative to U.S. dollar? A. Selling euros forward in the foreign exchange market. B. Partner with the local firm of the oversea market. C. Purchasing euros forward in the foreign exchange market. D. Establish a subsidiary in the oversea economy.
A firm ships its products to foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the a. Price is an arm-length’s price b. Price is a cost-plus price c. Transfer price is too low d. Transfer price is too high
In general, a firm that concentrates on local sales, has very little foreign competition, and obtains foreign supplies (denominated in foreign currencies) will likely ____ a(n) ____ local currency. A. none of these B. benefit from; depreciated C. be hurt by; depreciated D. be hurt by; appreciated
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