Foreign exchange effects on sales

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Reference no: EM131871274

Foreign Exchange Effects on Sales

True or false:

A multinational company reports that a large amount of its sales is generated in foreign currencies that have strengthened vis-à-vis the $US. Consolidated revenues are likely lower than would have been reported in the absence of such a shift in exchange rates.

Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase less $US, resulting in an decrease in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be higher.

Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase more $US, resulting in an increase in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be higher.

Strengthening foreign currencies implies a weakening $US. As the $US weakens, foreign currencies purchase less $US, resulting in an ncrease in foreign currency-denominated sales, expense and profit. Consolidated revenues will therefore, likely be lower.

Reference no: EM131871274

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