Why does deutzs have a re-measurement gain

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Reference no: EM132187189

(Financial statement analysis)

Analyse and discuss whether the financial information provided in the exhibits provided any warning of the company's eventual demise. Your answer should be based on an analysis of the companie's liquidity, efficiency, profitability and solvency ratios. Highlight and describe any anomalies or peculiarities in the financial ratios and/or financial data. (ratios are already down in excel)

Questions

1. How did the DM130,719 transaction loss arise? Show how this loss was calculated (see Exhibit 3).

2. Complete Exhibits 1, 2, and 3.

3. Why does Deutz's have a remeasurement gain (or loss) and a translation gain (or loss) in 2001? (explain with words rather than numbers).

4. What differences do the choice of functional currency make in the German subsidiary's dollar statement results and its key financial ratios? Explain the reasons for these differences.

5. It is Machinery International's practice to evaluate its overseas operations' performance in terms of their U.S. dollar equivalent performance.

The key performance measurements used by Machinery International are U.S. denominated return on sales, return on equity, return on assets and net income. If Machinery International changes Deutz's functional currency for financial reporting purposes, it intends to use the same approach for measuring the performance of the Deutz management. As a Deutz senior manager, how might you react to the new performance measurement approach, assuming the deutsche mark is the functional currency?

Reference no: EM132187189

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