A.Billabong Fashion is based in Melbourne, Australia. Billabong Fashion has a subsidiary in Shanghai that generates RMB85 million in annual sales. Any earnings generated by the subsidiary are reinvested to support its operations. Belle Fashion is the close competitor of Billabong Fashion. Belle Fashion is a local Australian company located in Japan with annual export sale to Malaysia of about MYR 45 million. Based on the information provided, which firm is subject to a higher degree of translation exposure? Justify your answer with thorough explanation on both companies.

(3marks)

B.Bintang Seri, an Indonesian company has a Malaysian subsidiary that earned MYR30 million this year. Sari Bulan, which is also resided in Indonesia has a Malaysian subsidiary that earned MYR20 million this year. The subsidiary of Bintang Seri plans to reinvest its earnings in Malaysia while the subsidiary of Sari Bulan plans to remit its earnings to the Indonesian parent. Another Indonesian company, Milando does not have a Malaysian subsidiary but it received revenue of MYR 40 million this year from exporting to Malaysia. All three companies have the same total revenue and total earnings levels (when considering their Indonesian business as well), and are the same size, and do not have any other international business. Which company is subject to the highest degree of translation exposure? Justify your answer with thorough explanation on all companies.

(3.5 marks)

C.Mama Mia Inc and Wonderful Inc are European-based companies with subsidiaries located in Kuala Lumpur. Both companies distribute chemical supplies (produced in Europe) to customers throughout Asia. Both subsidiaries purchase the products at cost and sell the products at 90 percent markup. The other operating costs of the subsidiaries are very low. Mama Mia Inc has a research and development centre in Europe that focuses on improving its medical technology. Wonderful Inc. has a similar centre based in Kuala Lumpur. The parent of each firm subsidizes its respective research and development centre on an annual basis. Which company is subject to a higher degree of economic exposure? Justify your answer with thorough explanation on both companies.