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What is cairo ingot contribution to the translation exposure

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Reference no: EM133111398

Question - Cairo Ingot, Ltd., is the Egyptian subsidiary of TransMediterranean Aluminum, a British multinational that fashions automobile engine blocks from aluminum. Trans-Mediterranean's home reporting currency is the British pound. Cairo Ingot's December 31st balance sheet is shown below. At the date of this balance sheet the exchange rate between Egyptian pounds and British pounds sterling was £E5.36/UK£.

Balance Sheet of Cairo Ingot, Ltd.

Egyptian pounds

Assets

Statement

Cash

16,500,000

Accounts receivable

33,000,000

Inventory

49,500,000

Net plant & equipment

66,000,000

Total

165,000,000


Liabilities & Net Worth

Accounts payable

24,750,000

Long-term debt

49,500,000

Invested capital

90,750,000

CTA account (loss)

-

Total

165,000,000

Required - What is Cairo Ingot's contribution to the translation exposure of Trans-Mediterranean on December 31st, using the current rate method?

Reference no: EM133111398

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