why cash flows hhghly dependent on exchange ratesfinancial managers of MNCs that conduct international business must continuously monitor exchange rates because their cash flows are highly dependent on them. Discuss the relevant factors that affect
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why cash flows hhghly dependent on exchange ratesfinancial managers of MNCs that conduct international business must continuously monitor exchange rates because their cash flows are highly dependent on them. Discuss the relevant factors that affect
why cash flows hhghly dependent on exchange rates
financial managers of MNCs that conduct international business must continuously monitor exchange rates because their cash flows are highly dependent on them. Discuss the relevant factors that affect exchange rates.
why cash flows hhghly dependent on exchange ratesfinancial managers of MNCs that conduct international business must continuously monitor exchange rates because their cash flows are highly dependent on them. Discuss the relevant factors that affect
In international business, contracts and transactions are concluded in different functional currencies. (If you have heard the term functional currency, you will know that each country has one functional currency and most of the time, the transaction needs to be concluded in that currency) Hence, the cash inflow and outflow may have one pair of currency for each transaction. Cash flows is the net effect of cash inflow and outflow of all these currencies. The relative exchange rate and its fluctuation decides the net effet.
E.g. If Mitsubishi Japan concludes a contract by selling elevators in US, the cost (outflow) will be in JPY and the revenue (inflow) will be in USD; the JPY/USD rate decides how much the net inflow (profit) will be, even for the same amount of revenue generated from US.