Translation exposure is an exposure of the MNCs consolidated financial statements to exchange rate fluctuations. Based on
Question:
Translation exposure is an exposure of the MNC’s consolidated financial statements to exchange rate fluctuations. Based on this statement, answer the questions below.
Phoenix Co. is a Thailand company with no foreign subsidiaries. Apart from businesses in Thailand, its exporting business results in annual cash inflows of 20 million dollar. Briefly explain how Phoenix Co. is subject to translation exposure (if at all).
Tucsonia Co. is a Thailand company with no exports and imports. It has a subsidiary in US that always generates earnings of 15 million dollar each year whereby none of the earnings are remitted to Thailand. Briefly explain how Tucsonia Co. is subject to translation exposure (if at all).
Thai baht is expected to weaken against dollar over the next several years. Explain how this will influence the consolidated earnings of Thailand-based MNCs with subsidiaries in US.
Essentials of Statistics for Business and Economics
ISBN: 978-1305081598
7th edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam