If the European Subsidiary of a U

question 38

Multiple Choice

If the European subsidiary of a U.S. firm has net exposed assets of €200,000, and the euro increases in value from $1.22/€ to $1.26/€ the U.S. firm has a translation:

• A) gain of $8,000.
• B) loss of $8,000.
• C) gain of $252,000.
• D) loss of €252,000.

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Definitions:

Gross Margin Percentage

A financial ratio that indicates the percentage of revenue that exceeds the cost of goods sold (COGS), a measure of profitability.

Total Assets

The total sum of all assets, both current and non-current, owned by a business.

Average Collection

The average period of time it takes for a business to receive payments owed by its customers.

Debt-to-equity Ratio

A measure of how a company's assets are financed, comparing the roles of shareholder equity and debt.