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Foreign Currency Denominations

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Select a U.S. multinational company. In terms of currency denomination, discuss how the firm prices its revenues and costs. For MNE's with multiple foreign operations, consider any one of those operations and the contribution it is making to the parent firm's profits. Using this information, what do you think would be the effect of increases/decreases in the dollar's exchange value on the firm's profitability? Be sure to show all applicable work.

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Foreign Currency Denominations

Introduction

The alterations in the currency denominations affect the overall profits of the companies operating in the global market place. Due to the changes in the currency exchange value in the global market, the profitability of the companies gets changed. In the global market, the profits of the multinational corporations depend on their operations in the foreign countries and it differs from country to country in terms of currency denominations. The paper will provide a detailed description about the effect of currency fluctuations on the US multinational company (Dickie, 2006).

Currency Denominations

'General Electric Company' is a US based multinational company and has its operations dispersed in various countries in different fields of business. With the assistance of its diversified business conglomerates, the company is operating successfully in the competitive business environment. For the evaluation of the profits and recording of the revenues and costs, it is necessary for the company to translate the foreign currency denominated transaction in terms of US dollars (Rice, 2008).

The company prices its revenues and costs on the basis of the foreign currency denomination norms and standards in the different countries. The company translates its revenues and costs in ...

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  • BBA, University of Rajasthan
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