Herbalife Ltd: has a subsidiary in Spain, Herbalife International Espafia, S.A., whose functional currency is the euro. Relevant translated data for the subsidiary appear below.

Required

a. Calculate return on assets for 2017 and 2018 using both translated (\($)\) and euro data.

b. Explain whether translation has distorted the Spanish subsidiary’s performance in 2018 compared with 2017. If so, explain how changes in the exchange rate contributed to the distortion.

Transcribed Image Text:

Date or Annual Period Total Assets Operating Income Exchange Rate January 1, 2017 $112,000,000 $1.40/ 2017 Average. $12,000,000 1.20/ December 31, 2017 95,000,000 1.00/ 2018 Average.. 10,890,000 0.90/ December 31, 2018 95,000,000 1.00/