You Own a Local US Company

question 5

Multiple Choice

You own a local US company. In the past year, you successfully expanded your sales market into Europe, and you now have profits and cash denominated in euros. You want to convert the euros to dollars to repatriate the profits and pay taxes. Which of the following is true?

• A)You are not required to convert the euros to the home currency to pay taxes.
• B)You are a demander of the euro in the foreign exchange market.
• C)You are a supplier of your home country's currency in the foreign exchange market.
• D)You are a demander of dollars in the foreign exchange market.

---

Definitions:

Average Collection Period

The average number of days it takes for a company to receive payment from its customers for invoices issued.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are converted into cash over a period, measuring the efficiency of a company in collecting its debts.

Current Ratio

A financial ratio indicating a firm's capacity to settle short-term debts using its current assets.

Current Liabilities

Obligations or debts that a company expects to pay or settle within one year or its operating cycle, whichever is longer.