10. Multinational working capital management AaAa Multinational companies are exposed to complex management and allocation of their resources. A multinational company's cash management, credit management, inventory management, and so on, need to have several additional elements factored in compared with those of a purely domestic corporation Consider this case: Multinational Inventory Management Streep Inc. is aU.S.-based multinational firm with a subsidiary in Switzerland. Last week, Streep created its periodic financial statements, and the subsidiary had SFr 70,000 worth of inventory on its balance sheet. Streep translated the value of inventory using the spot exchange rate at that time of $0.8153/SFr and recorded that value on its consolidated balance sheet. Decisions related to amount of investment in inventory and inventory policy need to factor in the following: Exchange rates .Possibility of import and export quotas or tariffs However, this week the exchange rate changed dramatically to $0.9225/ SFr. The subsidiary still has the same amount of inventory (valued at SFr 70,000) Tax consequences .Possibility of at-sea storage If the firm were to create a new consolidated balance sheet and translate the value of its inventory at the new spot exchange rate, what would happen to the dollar value of inventory? O It would increase by $7,504 O It would increase by $8,254 It would decrease by 9,005 It would decrease by $7,504 The change in inventory value was created purely by accounting and exchange rate factors, because the subsidiary still has the same inventory and assets in place. However, this change would affect Streep's consolidated financial statements and ratios. Assuming no other changes occurred, what effect would this have on Streep's current ratio? O The current ratio would increase. O The current ratio would decrease