外币财务报表翻译方法与跨国营决策.pdfVIP

FOREIGNCURRENCY

TRANSLATION

LEARNINGOBJECTIVE

Developthenecessaryunderstandingandskillstotranslatethefinancialstatementsofaforeign

entityintoU.S.dollarsusingtheall-currentandthemonetary-nonmonetarytranslationmethods.

Businessfirmsdesiringtosellgoodsorservicesincountriesotherthantheirhomecountrymustmakeatleast

twoimportantdecisions:

1.LocationofProductCreation.Shouldthefirmcreatethegoodorserviceinitshomecountryandthen

export(sell)abroad?Alternatively,shouldthefirmbothcreateandsellthegoodorserviceabroad

throughsomeforeignentity(forexample,abranchofficeorsubsidiary)?

2.CurrencyforDenominatingTransactions.Shouldthefirmstructuretransactionssothatallcashflows

occurinthecurrencyofthehomecountry?Alternatively,shouldthefirmusethecurrencyofthefor-

eigncountrytodenominateallcashflows?

Themannerinwhichafirmstructuresitsforeignoperationsaffectsitsexposuretoe-ratechanges.

Abriefoverviewoferateswillenhanceanunderstandingoftheeffectofe-ratechangeson

afirm.

NATUREOFERATES

Anerateisthepriceofonecountry’scurrencyintermsofanothercountry’scurrency.Forexam-

ple,theBritishpoundmightbeworthU.S.$2.00atagiventime.Theeratewouldbestatedas“one

Britishpoundisworthtwodollars,”or“onedollarisworth.50(=£1/$2)Britishpound.”

Erates,likethepriceofanygoodorservice,reflecttheforcesofdemandandsupply.Economic

andpoliticalconditions,aswellasprospectswithinacountryrelativetothoseinothercountries,affectthe

leveloferates.New,unanticipatedinf