Home currency on the firm''s economic exposure

Reference no: EM131085264

A domestic firm, Home Company, is evaluating the effect of an appreciation in the home currency on the firm's economic exposure. In each of the following categories of economic exposure, indicate whether the domestic currency appreciation is likely to have a positive or negative effect on Home Company's cash flow. State your conclusion and offer an one-sentence explanation for you conclusion as in the example shown for the first row.

Direct economic exposure:

Revenue from sales abroad negative - foreign revenue worth less in home currency terms

Cost of inputs sourced

(purchased) abroad

Profits repatriated from

abroad

Foreign tax liabilities

Indirect economic exposure

Position vis-à-vis a competitor

who sources abroad

Domestic competitor who sells abroad

Foreign competitor who sells

in Home Co.'s country

Supplier who sources abroad

Customer who sells abroad

Customer who sources abroad

Reference no: EM131085264

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