Reading 26- LOS a(part 1) ～ Q1－3

1.A German company owns a foreign subsidiary in the U.S. If the results below are reported in Euros, what is the flow effect of the change in the exchange rate?

Round to the nearest dollar and/or percent.

A)   The company shows a 0.1% decline in revenues in 2002.

B)   The company shows a 125.0% growth in revenues in 2002.

C)   The company shows a 12.5% growth in revenues in 2002.

D)   There is no change is revenue growth between 2001 and 2002.

2.A U.S. firm owns a foreign subsidiary in France. In 2002, sales were EUR 1,000,000 and the USD/EUR exchange rate was 1.0620. In 2003, sales were EUR 1,100,000 and the exchange rate was 1.1417. What is the impact of the change in the value of the USD on the parent company’s translated sales? Sales will:

A)   increase by 18.25%.

B)   decrease by 7.5%.

C)   increase by 7.5%.

D)   decline by 18.25%.

3.A Canadian firm owns a foreign subsidiary in the U.S. In 2002, sales were USD1,000,000 and the USD/CAD exchange rate was 0.6329. In 2003, sales were also USD1,000,000 but the exchange rate was 0.7484. What is the impact of the change in the value of the CAD on the parent company’s translated sales? Sales will:

A)   increase by 15%.

B)   increase by 18%.

C)   decrease by 18%.

D)   decline by 15%.