Changes in the reals movements against the euro

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Reference no: EM133491125

Case: Applied Conductors (a Spanish firm) has no subsidiaries and presently has sales to Brazilian customers (in Brazilian Real) amounting to 93 million Brazilian real, while its Real-denominated expenses amount to 21 million Brazilian real. If it shifts its material orders from its Brazilian suppliers to Spanish suppliers, it could reduce Real-denominated expenses by 14 million Brazilian real and increase Euro-denominated expenses by €2.16 million.

This strategy would INCREASE/REDUCE the Applied Conductors's exposure to changes in the real's movements against the euro.
Regardless of whether the firm shifts expenses, it is likely to perform better when the real is INCREASING/DECREASING in value relative to the euro.

Reference no: EM133491125

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