Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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. 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 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? It would decrease by $ 5, 232. It would increase by $5, 755. It would increase by $5, 232. It would decrease by $6, 278. Streep Inc. is a U.S. -based multinational firm with a subsidiary in Switzerland, Last week, Streep created its periodic financial statements, and the subsidiary had SFr 60,000 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. However, this week the exchange rate changed dramatically to $0.9025/SFr. The subsidiary still has the same amount of inventory 9valued at SFr 60,000)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started