Impact of Inflation. Stinmark Company operates a sales subsidiary in Venezuela. Its Venezuelan assets and liabilities for the beginning and the end of year were exactly the same and appear as follows in thousands of bolivars:

Inflation was about 100 percent during the year in Venezuela. The exchange rate for the Venezuelan bolivar was \(\$ 0.01\) per bolivar at the beginning of the year and \(\$ 0.005\) at yearend.
\section*{Required:}
1. Ignoring profits or losses for the year and using the exchange rates given, show the impact of the change in exchange rates on Stinmark's equity position in its Venezuela subsidiary.
2. Comment on possible strategies Stinmark might follow to protect itself.

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Cash. B 50,000 Accounts receivable 200,000 Accounts payable Borrowings B120,000 200,000 Inventories Supplies 150,000 30,000 Equipment 130,000