scholarly journals Choice Of Functional Currency Under SFAS No. 52

2011 ◽  
Vol 4 (4) ◽  
pp. 21
Author(s):  
Ahmad Hosseini ◽  
Zabihollah Rezaee
Keyword(s):  
Exchange Rates ◽  
Multinational Corporations ◽  
Foreign Currency ◽  
Financial Statements ◽  
Cash Flows ◽  
Selection Of

The purpose of this study is to determine the importance of various factors in the choice of the functional currency used by 400 major multinational corporations Selection of functional currency is a key feature of SFAS No. 52 because it determines the method used to translate foreign currency financial statements into U.S. dollars and the extent to which changes in exchange rates affect consolidated operating results. The results reveal that cash flows and sales market were the two most important factors, while financing and intercompany transactions were the least important criteria in selecting the functional currency.

Megascreens USA Inc.—A Foreign Operations Case

2007 ◽  
Vol 22 (4) ◽  
pp. 579-590 ◽  
Author(s):  
Charles A. Carslaw ◽  
S. E. C. Purvis
Keyword(s):  
Financial Reporting ◽  
Foreign Currency ◽  
Financial Statements ◽  
The United States ◽  
Cash Flows ◽  
Consolidated Financial Statements ◽  
Comprehensive Overview ◽  
Financial Reporting Standards ◽  
Foreign Operations ◽  
Statement Of Cash Flows

This relatively short case gives students a comprehensive overview of the steps required to prepare consolidated financial statements under U.S. GAAP when a subsidiary prepares its accounts under a foreign GAAP—in this case, International Financial Reporting Standards (IFRS). While the case is closely based on an actual Australasian company seeking listing in the United States, the product and the exact financial details are disguised. Specifically, the case exposes students to the following: accounting for foreign currency transactions; adjustments to convert foreign GAAP to U.S. GAAP (accounting for license fees); translation of financial statements; change of functional currency; remeasurement of financial statements; and foreign consolidation and statement of cash flows with foreign operations. The case has been field-tested in an advanced accounting course and is also suitable for use in international accounting courses. Both undergraduate and graduate students have profited from the case.

STATISTICAL ANALYSIS OF THE INFLUENCE OF EXCHANGE RATE DIFFERENCES ON THE FINANCIAL RISK OF STEVEDORING COMPANIES

2018 ◽  
Author(s):  
Svitlana Oneshko ◽  
◽  
Yuliia Hevrek ◽  
Keyword(s):  
Exchange Rate ◽  
Statistical Analysis ◽  
Exchange Rates ◽  
Financial Risk ◽  
Foreign Currency ◽  
Negative Impact ◽  
Cash Flows ◽  
Income Loss ◽  
Financial Plan ◽  
The Impact

Increased interest from users of financial information, which is risky in nature, determines the relevance of the study of the impact of exchange rate differences on the financial risk of economic entities and their financial performance. There is the need to refine the impact of exchange rate differences on the financial risk of economic entities in the perspective of sectoral characteristics, also to determine the practical aspect of using methods of statistical analysis and to identify factors influencing the income generated in foreign currency. The study examines the impact of exchange rate differences on financial risk on the example of state stevedoring companies in Ukraine, the peculiarity of which is the settlement in foreign currency which is associated with the formation of chord rates in US dollars. It is concluded that there is a discrepancy between the US dollar exchange rate, which was included in the financial plan of state stevedoring companies, and the actual exchange rate. This fact directly affected the level of income, namely their reduction from the main activity in absolute terms. Determining the structural ratio of the impact of factors of cargo volume and the average income rate per 1 ton of cargo allowed us to establish that throughout the period there was a negative impact of the income rate factor which is formed in dollar terms. From the standpoint of the statistical analysis of the impact of the dollar on the formation of the revenue side of the financial results of state stevedoring companies of Ukraine and the results, it is proposed to take measures to reduce potential financial risks and avoid / minimize financial losses in terms of income loss, namely graphical and statistical methods based on built models, which adequately describe the dynamics of the series to select the best model for constructing forecast data; during the formation of the financial plan of the stevedoring company to take into account trends in exchange rates by conducting a more detailed analysis, for example, the general trend of exchange rates over time by the method of aggregation of intervals, moving average and analytical alignment; to apply the method of hedging future cash flows that depend on currency risks in order to reduce the propensity to risks and uncertainties associated with changes in external economic conditions for exchange rates which will minimize the negative impact and eliminate uncertainty about exchange rates in the future.

Analisis Dampak Kurs Mata Uang Inflasi dan Pertumbuhan Ekonomi terhadap Return Saham: Studi pada Ferusahaan Multinasional di Bursa Efek Jakarta

2006 ◽  
Vol 1 (2) ◽  
pp. 167
Author(s):  
Chalasina Violend Tiven ◽  
Elok Pakaryaningsih
Keyword(s):  
Gross Domestic Product ◽  
Exchange Rates ◽  
Stock Returns ◽  
Multinational Corporations ◽  
Stock Price ◽  
Foreign Currency ◽  
Abnormal Returns ◽  
Domestic Product ◽  
Currency Exchange ◽  
Negative Effect

The main objective of this study is to provide empirical evidence of the effect of macro economic factors on stock return. Moreover, this study is focused on multinational corporations due to their specific characteristics which are constantly reluctant to macro economic fuctors, especially foreign currency changes. This reluctantly, therefore triggered stock price changes.The sample is taken using non-probability random sampling in year 2000-2044 and resulted on 3 5 companies which are consistent with sample criteria. Subsequently, the data were analyzed using pooled least squares regression.The independent variables for the model are inflation, gross domestic product and currency exchange rates, whilst the dependent variqble for the model is daily abnormal returns which ore occumulated during a year (CAR). The resultof this study shows positive ffict of inflation on stock returns and negative effect of domestic product on stock returns. On the contrary, exchange rates failed to demonstrate its effect on stock returns.Key words: inflation, gross domestic product, exchange rotes and stock returns

scholarly journals ANALYSIS THE EFFECT OF GROWTH OPPORTUNITY, LIQUIDITY, LEVERAGE, AND VOLATILITY OF CASH FLOWS TO HEDGING DECISIONS

2019 ◽  
Vol 7 (12) ◽  
pp. 307-312
Author(s):  
Ayudia Dwi Puspitasari
Keyword(s):  
Foreign Currency ◽  
Stock Exchange ◽  
Manufacturing Sector ◽  
Secondary Data ◽  
Financial Statements ◽  
Cash Flows ◽  
Growth Opportunity ◽  
Exchange Risk ◽  
Cash Flow Volatility ◽  
The Relationship

Companies operating internationally will surely experience the risk of foreign currency fluctuations. The use of foreign exchange raises an exchange risk profile that must be addressed. One way to overcome the exchange rate risk is to use currency derivatives as hedging tools. research This is a conceptual paper that aims to determine the effect of growth opportunity, liquidity, leverage, and cash flow volatility on hedging decisions. This study uses secondary data in the form of annual financial statements of manufacturing sector companies listed on the Indonesia Stock Exchange (IDX) from 2015 to 2018. Updates in this study are samples and research years and the addition of control variables to control the relationship between the dependent and independent variables.

scholarly journals PARTICULARITIES REGARDING THE REFLECTION OF FOREIGN CURRENCY TRANSACTIONS IN FINANCIAL STATEMENTS

2014 ◽  
Author(s):  
Ionela Cristina Breahna Pravat
Keyword(s):  
Exchange Rates ◽  
Foreign Exchange ◽  
Financial Reporting ◽  
Foreign Currency ◽  
National Level ◽  
Balance Sheet ◽  
Financial Statements ◽  
Foreign Exchange Rates ◽  
European Directives ◽  
Ias 21

The structure and the constituent parts of financial statements are regulated at a national level, mainly by Accounting regulations compliant with European Directives ̶ O.M.P.F. no. 3055/2009, but also by Accounting regulations compliant with International Financial Reporting Standards applied by the trading companies whose securities are rated on a regulated capital market ̶ O.M.P.F. no. 1286/2012. From this latter point of view, an important role is played by IAS 1 “Presentation of Financial Statements”, respectively IAS 21 “The Effects of Changes in Foreign Exchange Rates”. Therefore, this study aims to describe a series of theoretical and practical aspects regarding the particularities of presenting elements generated by foreign currency transactions in financial statements, which are prepared in compliance with the Romanian accounting regulations ̶ balance sheet, profit and loss account, cash flow statement, statement of changes in equity, explanatory notes. The paper also approaches the effect of changes in foreign exchange rates, respectively the accounting recognition of exchange differences, which are specific to different foreign currency operations, according to national regulations (and implicitly, to European Directives), but also according to international regulations (IFRS).

scholarly journals Cross-border DCF valuation: discounting cash flows in foreign currency

2020 ◽  
Author(s):  
Andreas Schüler
Keyword(s):  
Exchange Rates ◽  
Interest Rates ◽  
Financial Management ◽  
Financial Risk ◽  
Foreign Currency ◽  
Weighted Average ◽  
Cash Flows ◽  
Discounted Cash Flow ◽  
Cross Border ◽  
Tax Effects

Abstract The paper seeks to develop a comprehensive framework to cross-border discounted cash flow valuation. Although the literature on company valuation and on international financial management is vast, such a framework has not yet been proposed. We build upon well-known fundamentals and relevant contributions, e.g. on the derivation of the risk-adjusted rate of return. Relevant risks are exchange rate risk, business risk, financial risk, the risk of the tax effects induced by debt financing, and the risk of default. Additional tax effects beyond the well-known tax shield on interest expenses must be considered. Risk discounts from cash flows and risk premia to be added to risk-free interest rates are derived according to the global capital asset pricing model. A conceptual choice occurs not only between the foreign currency and the home currency approach, but also regarding the estimation of future exchange rates. The paper shows how a valuation can be implemented with or without consideration of covariances between cash flows and rate of returns with exchange rates. It also derives the discount rates if forward exchange rates are applied. We discuss the consequences of assuming the uncovered interest parity to hold. We assume deterministic debt and apply the adjusted present value approach. In addition, we derive the RADR to be used in the flow to equity and weighted average cost of capital approach. The paper addresses not only the valuation of a foreign company, but also the valuation of a domestic company that generates cash flows in foreign currency and/or uses debt in foreign currency.

Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

2015 ◽  
pp. 23-40 ◽  
Author(s):  
Francesco Avallone ◽  
Claudia Gabbioneta ◽  
Paola Ramassa ◽  
Marco Sorrentino
Keyword(s):  
Good Deal ◽  
Financial Statements ◽  
Cash Flows ◽  
Accounting System ◽  
Anglo Saxon ◽  
Accounting Systems ◽  
Ifrs Adoption ◽  
The Future

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are "interpreted" differently in different countries and that harmonization of financial statements has not been fully achieved yet.

ANALISIS EKSPOSUR EKONOMI DAN FAKTOR-FAKTOR YANG MEMPENGARUHINYA PADA PERUSAHAAN ROKOK YANG TERCATAT DI BEI

Wahana ◽  
2019 ◽  
Vol 21 (2) ◽  
pp. 98-109
Author(s):  
Ida Musdafia Ibrahim ◽  
Arif Haryono
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Cash Flow ◽  
Firm Value ◽  
Tobacco Industry ◽  
Cash Flows ◽  
Least Square ◽  
Exchange Rate Risk ◽  
Positive Effects ◽  
Rate Risk

This study aims to analyze economic exposures and its factors namely exchange rates and inflation, that influence firm value as reflected through firm cash flow. Analytical method used Ordinary Least Square and eviews as analytical tool. This study used secondary data and cigarette industry companies listed on the Indonesia Stock Exchange as samples along 2008 to 2017. Samples choosing method used purposive sampling based on determined criterias. The results showed that partially economic exposure had positive effects on firm value but insignificant. These could be seen from the economic exposure factors influncenced namely exchange rates and inflations.The exchange rate risk has low influenced cash flow was caused of the tobacco industry has low level of export/import.Enhance,inflation also had low effect on cash flow was caused of the tendency of cigarette consumers will continue to buy cigarettes even though its price increases. In short, economic exposure in the tobacco industry has low influence toward firms value. Hence, simultaneously changes in exchange rates and inflation which are economic exposure indicators have a significant effect on cash flows.  Keywords: Economic Exposure, Exchange Rate Risk, Inflation Risk, Firms Value, Cash Flow

MENGELOLA RESIKO DENGAN PRODUK DERIVATIF

2008 ◽  
Author(s):  
Dandes Rifa
Keyword(s):  
Risk Management ◽  
Value At Risk ◽  
Foreign Currency ◽  
Balance Sheet ◽  
Cash Flows ◽  
Market Risks ◽  
Hedging Strategies ◽  
Operational Hedging ◽  
Potential Risks ◽  
Derivative Products

The main objective of risk management is to minimize the potential for losses (risk) arising from unexpected changes in currency rates, credit, commodities and equities. One of the risks faced by companies is market risk (value at risk). This article aims to explain that risk management can be one of them by using derivative products. Derivative transactions is very useful for business people who want to hedge (hedging) against a commodity, which always experience price changes from time to time. There are three strategies that can be used to hedge the balance sheet hedging strategy, operational hedging strategies and contractual hedging strategies. Staregi contractual hedging is a form of protection that is done by forming a contractual hedging instruments in order to provide greater flexibility to managers in managing the potential risks faced by foreign currency. Most of these contractual hedging instrument in the form of derivative products. The management can enhance shareholder value by controlling risk. -Party investors and other interested parties hope that the financial manager is able to identify and manage market risks to be faced. If the value of the firm equals the present value of future cash flows, then risk management can be justified. 

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