Assume that the dollar is expected to strengthen against the euro over the next several years. Discuss how this will affect the consolidated earnings of the U.S.-Based MNEs with subsidiaries in Europe. Be sure to use the concepts of economic exposures and translation exposures to discuss how the cash flows and earnings of these companies will be affected in U.S. dollars. Also explain some of the measures these companies can use to protect their market shares, cash flows, and ultimately their earnings in U.S. dollars.

Answer rating: 100% (QA)

Impact of Dollar Strengthening on US MNEs with European Subsidiaries A strengthening dollar can have both positive and negative effects on the consoli... View the full answer