giants2010

For the current rate method -

CA / CL will remain the same whatever be the change in Currency.

But it will differ for the Temporal method.

Since CA includes Inventory, and the Inventory is valued differently - also depending on LIFO/FIFO/Wt Avg Flow assumption.

Using LIFO, e.g. - Newest inventory is in COGS, so older inventory in Ending Inventory.
If LC is appreciating - Older Ending Inventory would be LOWER.
So CA/CL would be lower when compared to the Current Rate method.

If LC is depreciating -> Older Ending Inv. is costlier, in the End Inv. So CA is higher, CA/CL will be higher when compared to the Current Rate method.

CP