Ss 6 - Multinational Operations

Front 1

local currency

Back 1

is the currency of the country in which the foreign subsidiary is located.

Front 2

functional currency

Back 2

is defined as the currency of the primary economic environment in which the foreign subsidiary generates and expends cash. The choice reflects management’s judgment. It can be the currency in which the subsidiary conducts operations or some other currency.

Front 3

reporting currency

Back 3

is the currency in which the multinational firm prepares its final, consolidated financial statements.

Front 4

Monetary Assets Temporal

Back 4

current rate

Front 5

Nonmonetary Assets Temporal

Back 5

historical rate

Front 6

Common Stock Temporal

Back 6

historical rate

Front 7

Equity Temporal

Back 7

mixed rate

Front 8

Revenues and SG&A Temporal

Back 8

average rate

Front 9

COGS Temporal

Back 9

historical rate

Front 10

Depreciation Temporal

Back 10

historical rate

Front 11

Net Income Temporal

Back 11

mixed rate

Front 12

Monetary Assets All- Current

Back 12

current rate

Front 13

Nonmonetary Assets All- Current

Back 13

current rate

Front 14

Common Stock All- Current

Back 14

historical rate

Front 15

Equity All- Current

Back 15

current rate

Front 16

Revenues and SG&A All- Current

Back 16

average rate

Front 17

COGS All- Current

Back 17

average rate

Front 18

Depreciation All- Current

Back 18

average rate

Front 19

Net Income All- Current

Back 19

average rate

Front 20

Net exchange exposure (all current)

Back 20

shareholder's equity

Front 21

Net exchange exposure (temporal)

Back 21

(cash + accounts receivable) - (accounts payable + current debt + long term debt)

Front 22

flow effect (all-current or temporal)

Back 22

change in exposure (in LC) * (ending rate - average rate)

Front 23

holding gain/loss effect

Back 23

beginning exposure (in LC) * (ending rate - beginning rate)

Front 24

translation gain/loss effect

Back 24

flow effect + holding gain/loss efffect

Front 25

Cumulative translation adjustment

Back 25

all current method of accumulating the translation gain/loss on the balance sheet in the equity section of comprehensive income

Front 26

Temporal Method Depreciation Blended Rate formula

Back 26

(beg fix ass/end fix ass * historical rate) + (fixed ass inv./end fixd asset * avg. rate)

Front 27

Net fixed assets (remeasured balance sheet)

Back 27

Remeasured Ending Fixed Assets - Remeasured Ending accumulated depreciation

Front 28

Temporal (Appreciating Currency) - Revenues

Back 28

same

Front 29

Temporal (Appreciating Currency) - COGS

Back 29

lower

Front 30

Temporal (Appreciating Currency) - Gross profit

Back 30

higher

Front 31

Temporal (Appreciating Currency) - Depreciation

Back 31

lower

Front 32

Temporal (Appreciating Currency) - Other Expenses

Back 32

same

Front 33

Temporal (Appreciating Currency) - NI before translation g/l

Back 33

higher

Front 34

Temporal (Appreciating Currency) - NI after translation g/l

Back 34

uncertain

Front 35

Temporal (Appreciating Currency) - Cash

Back 35

same

Front 36

Temporal (Appreciating Currency) - Accounts Receivable

Back 36

same

Front 37

Temporal (Appreciating Currency) - Inventory

Back 37

lower

Front 38

Temporal (Appreciating Currency) - Fixed Assets

Back 38

lower

Front 39

Temporal (Appreciating Currency) - Total Assets

Back 39

lower

Front 40

Temporal (Appreciating Currency) - Liabilities

Back 40

same

Front 41

Temporal (Appreciating Currency) - Equity

Back 41

lower

Front 42

All-current (Appreciating currency) - Revenues

Back 42

same

Front 43

All-current (Appreciating currency) - COGS

Back 43

higher

Front 44

All-current (Appreciating currency) - Gross profit

Back 44

lower

Front 45

All-current (Appreciating currency) - Depreciation

Back 45

higher

Front 46

All-current (Appreciating currency) - Other Expenses

Back 46

same

Front 47

All-current (Appreciating currency) - NI before translation g/l

Back 47

lower

Front 48

All-current (Appreciating currency) - NI after translation g/l

Back 48

uncertain

Front 49

All-current (Appreciating currency) - Cash

Back 49

same

Front 50

All-current (Appreciating currency) - Accounts Receivable

Back 50

same

Front 51

All-current (Appreciating currency) - Inventory

Back 51

higher

Front 52

All-current (Appreciating currency) - Fixed Assets

Back 52

higher

Front 53

All-current (Appreciating currency) - Total Assets

Back 53

higher

Front 54

All-current (Appreciating currency) - Liabilities

Back 54

same

Front 55

All-current (Appreciating currency) - Equity

Back 55

higher

Front 56

Temporal (Depreciating LC) - Revenues

Back 56

same

Front 57

Temporal (Depreciating LC) - COGS

Back 57

higher

Front 58

Temporal (Depreciating LC) - Gross profit

Back 58

lower

Front 59

Temporal (Depreciating LC) - Depreciation

Back 59

higher

Front 60

Temporal (Depreciating LC) - Other Expenses

Back 60

same

Front 61

Temporal (Depreciating LC) - NI before translation g/l

Back 61

lower

Front 62

Temporal (Depreciating LC) - NI after translation g/l

Back 62

uncertain

Front 63

Temporal (Depreciating LC) - Cash

Back 63

same

Front 64

Temporal (Depreciating LC) - Accounts Receivable

Back 64

same

Front 65

Temporal (Depreciating LC) - Inventory

Back 65

higher

Front 66

Temporal (Depreciating LC) - Fixed Assets

Back 66

higher

Front 67

Temporal (Depreciating LC) - Total Assets

Back 67

higher

Front 68

Temporal (Depreciating LC) - Liabilities

Back 68

same

Front 69

Temporal (Depreciating LC) - Equity

Back 69

higher

Front 70

All-current (Depreciating LC) - Revenues

Back 70

same

Front 71

All-current (Depreciating LC) - COGS

Back 71

lower

Front 72

All-current (Depreciating LC) - Gross profit

Back 72

higher

Front 73

All-current (Depreciating LC) - Depreciation

Back 73

lower

Front 74

All-current (Depreciating LC) - Other Expenses

Back 74

same

Front 75

All-current (Depreciating LC) - NI before translation g/l

Back 75

higher

Front 76

All-current (Depreciating LC) - NI after translation g/l

Back 76

uncertain

Front 77

All-current (Depreciating LC) - Cash

Back 77

same

Front 78

All-current (Depreciating LC) - Accounts Receivable

Back 78

same

Front 79

All-current (Depreciating LC) - Inventory

Back 79

lower

Front 80

All-current (Depreciating LC) - Fixed Assets

Back 80

lower

Front 81

All-current (Depreciating LC) - Total Assets

Back 81

lower

Front 82

All-current (Depreciating LC) - Liabilities

Back 82

same

Front 83

All-current (Depreciating LC) - Equity

Back 83

lower

Front 84

Temporal (Appreciating Currency) - Current Ratio

Back 84

lower

Front 85

Temporal (Appreciating Currency) - Quick Ratio

Back 85

same

Front 86

Temporal (Appreciating Currency) - A/R Turnover

Back 86

same

Front 87

Temporal (Appreciating Currency) - Inventory turnover

Back 87

uncertain

Front 88

Temporal (Appreciating Currency) - Fixed asset turnover

Back 88

higher

Front 89

Temporal (Appreciating Currency) - Total asset turnover

Back 89

higher

Front 90

Temporal (Appreciating Currency) - Gross profit margin

Back 90

higher

Front 91

Temporal (Appreciating Currency) - Net profit margin

Back 91

uncertain

Front 92

Temporal (Appreciating Currency) - ROE

Back 92

uncertain

Front 93

Temporal (Appreciating Currency) - ROA

Back 93

uncertain

Front 94

Temporal (Appreciating Currency) - Interest coverage

Back 94

higher

Front 95

Temporal (Appreciating Currency) - LTD to total capital

Back 95

higher

Front 96

All-current (Appreciating currency) - Current Ratio

Back 96

higher

Front 97

All-current (Appreciating currency) - Quick Ratio

Back 97

same

Front 98

All-current (Appreciating currency) - A/R Turnover

Back 98

same

Front 99

All-current (Appreciating currency) - Inventory turnover

Back 99

uncertain

Front 100

All-current (Appreciating currency) - Fixed asset turnover

Back 100

lower

Front 101

All-current (Appreciating currency) - Total asset turnover

Back 101

lower

Front 102

All-current (Appreciating currency) - Gross profit margin

Back 102

lower

Front 103

All-current (Appreciating currency) - Net profit margin

Back 103

uncertain

Front 104

All-current (Appreciating currency) - ROE

Back 104

uncertain

Front 105

All-current (Appreciating currency) - ROA

Back 105

uncertain

Front 106

All-current (Appreciating currency) - Interest coverage

Back 106

lower

Front 107

All-current (Appreciating currency) - LTD to total capital

Back 107

lower

Front 108

Temporal (Depreciating LC) - Current Ratio

Back 108

higher

Front 109

Temporal (Depreciating LC) - Quick Ratio

Back 109

same

Front 110

Temporal (Depreciating LC) - A/R Turnover

Back 110

same

Front 111

Temporal (Depreciating LC) - Inventory turnover

Back 111

uncertain

Front 112

Temporal (Depreciating LC) - Fixed asset turnover

Back 112

lower

Front 113

Temporal (Depreciating LC) - Total asset turnover

Back 113

lower

Front 114

Temporal (Depreciating LC) - Gross profit margin

Back 114

lower

Front 115

Temporal (Depreciating LC) - Net profit margin

Back 115

uncertain

Front 116

Temporal (Depreciating LC) - ROE

Back 116

uncertain

Front 117

Temporal (Depreciating LC) - ROA

Back 117

uncertain

Front 118

Temporal (Depreciating LC) - Interest coverage

Back 118

lower

Front 119

Temporal (Depreciating LC) - LTD to total capital

Back 119

lower

Front 120

All-current (Depreciating LC) - Current Ratio

Back 120

lower

Front 121

All-current (Depreciating LC) - Quick Ratio

Back 121

same

Front 122

All-current (Depreciating LC) - A/R Turnover

Back 122

same

Front 123

All-current (Depreciating LC) - Inventory turnover

Back 123

uncertain

Front 124

All-current (Depreciating LC) - Fixed asset turnover

Back 124

higher

Front 125

All-current (Depreciating LC) - Total asset turnover

Back 125

higher

Front 126

All-current (Depreciating LC) - Gross profit margin

Back 126

higher

Front 127

All-current (Depreciating LC) - Net profit margin

Back 127

uncertain

Front 128

All-current (Depreciating LC) - ROE

Back 128

uncertain

Front 129

All-current (Depreciating LC) - ROA

Back 129

uncertain

Front 130

All-current (Depreciating LC) - Interest coverage

Back 130

higher

Front 131

All-current (Depreciating LC) - LTD to total capital

Back 131

higher

Front 132

Remeasurement

Back 132

translation of local currency transactions into functional currency

Front 133

Translation

Back 133

conversion of functional currency of subsidiary into reporting currency

Front 134

Temporal method (where does gain/loss appear?)

Back 134

income statement