Question
A company faces a current spot exchange rate of €2.5 = $1 and a historic rate...
A company faces a current spot exchange rate of €2.5 = $1 and a historic rate of €3.5 = $1. Translate the below financial statements using the Current Rate method. Balance Sheet
Cash € 4,000
Inventory € 1,000
Fixed Assets € 2,500 CTA
Total Assets € 7,500 $
Current liabilities € 1,500
Long term debt € 1,800
Common stock € 2,220
retained earnings € 1,980
CTA Total liabilities & equity € 7,500 $
Income Statement
Sales € 13,000
COGS € 9,000
Depreciation € 700
Net operating income € 3,300 $
Tax @ 40% -€ 1,320
Income after tax € 1,980
FX Gain/Loss Net Income € 1,980 $
Dividends € 0
retained earnings € 1,980 $
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