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    How the firm prices its revenues and costs

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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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    Solution Preview

    For the purpose of this assignment, we select the company IBM(International Business Machines), which has operations all over the world.

    IBM has business operations in India in the form of offshore development center for information technology services. The revenues and costs of IBM's India operations are not only done according to the local accounting practices, but are adjusted according to GAAP (Generally accepted accounting practices), which is the standard accepted by all US and global companies. This practice ensures consistence in accounting for companies with global operations. The currency denomination will be in USA dollars to ensure ...

    Solution Summary

    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.

    $2.19