Slide 27 of
32
Slides developed by Jeff Madura, with
additions and enhancements by Tim Richardson
Translation Exposure
uAffects
value of assets, liabilities and earnings
uArgument
for relevance to MNC
–affects financial statements (MNC performance)
–reflects
an earlier trend in opinions
uArgument
for irrelevance to MNC
–does
not affect cash flows
–weak foreign currency may be retained or invested in
foreign country
Measures impact that exchange rate
fluctuations have
upon an MNC’s consolidated financial
statement
