Can Currency Changes Affect Operating Cash Flow of a Domestic

question 9

Multiple Choice

Can currency changes affect operating cash flow of a domestic firm?

• A)Yes,because there really is no firm that is purely domestic and all firms deal in buying or selling in foreign currencies.
• B)No,domestic firms are those that only deal in the currency of the country where they are located,so changes in currency values cannot affect them.
• C)No,domestic firms are protected form changes in currency values by the government of the country where they operate.
• D)Yes,since domestic firms may deal in products that are based on a foreign currency and may be affected by changes in the value of that foreign currency.

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Definitions:

Governmental Agencies

Governmental agencies are public entities established by governments to enact policies, regulate activities, and administer services in various sectors.

Tax Rate

The percentage at which an individual or corporation is taxed.

Income Before

"Income Before" generally precedes specific deductions or expenses, such as taxes or interest, indicating a subtotal of income in financial statements.

Bonus

Additional compensation given to employees as a reward for their performance or for special occasions.