Americo's EPS Sensitivity to Exchange Rates (A). Americo is a US-based multinational manufacturing firm with wholly-owned subsidiaries in Brazil, Germany, and China, in addition to domestic operations in the United States. Americo is traded on the NASDAQ. Americ currently has 648,000 shares outstanding. The basic operating characteristics of the various business units is as follows (Click on the icon to import the table into a spreadsheet.) Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate U.S. Parent (US$) $4,590 35% Americo must pay corporate income tax in each country in which it currently has operations. a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in US dollars? Average exchange rate for the period Brazilian Subsidiary (R$) R$6,220 25% R$1.769/5 German Subsidiary (e) €4,530 40% €0.6677/5 Chinese Subsidiary (M) ¥2,470 30% ¥7.6887/5 b. Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reals and, subsequently, inducing an economic recession within the country. What would be the impact on Americo's consolidated EPS if the Brazilian reais were to fall in value to DE 2007/ith all athar naminne and nuchanan radar amaining the rama? a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? Calculate the business performance per country below: (Round to two decimal places. Round exchange rates to four decimal places.) U.S. Parent Brazilian German Business Performance (000s) Company Subsidiary Subsidiary Chinese Subsidiary Earnings before taxes (local currency) S R$ € Less corporate income taxes $ R$ * V Net profits of individual subsidiary S R$ Avg exchange rate for the period (fc/5) Net profits of individual subsidiary The consolidated earnings per share is $(Round to the nearest cent) R$3.0097/5, with all other earnings and exchange rates remaining the same? + b. Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reais and, subsequently, inducing an économic recession within the country. What would be the impact on Americo's consolidated EPS if the Brazilian reais were to fall in value to Calculate the business performance per country below. (Round to two decimal places. Round exchange rates to four decimal places.) U.S. Parent Brazilian Business Performance (000s) Company Subsidiary German Subsidiary Chinese Subsidiary Earnings before taxes (local currency) Less corporate income taxes S R$ $ R$

Americo's EPS Sensitivity to Exchange Rates (A). Americo is a US-based multinational manufacturing firm with wholly-owned subsidiaries in Brazil, Germany, and China, in addition to domestic operations in the United States. Americo is traded on the NASDAQ. Americ currently has 648,000 shares outstanding. The basic operating characteristics of the various business units is as follows (Click on the icon to import the table into a spreadsheet.) Business Performance (000s) Earnings before taxes (EBT) Corporate income tax rate U.S. Parent (US$) $4,590 35% Americo must pay corporate income tax in each country in which it currently has operations. a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in US dollars? Average exchange rate for the period Brazilian Subsidiary (R$) R$6,220 25% R$1.769/5 German Subsidiary (e) €4,530 40% €0.6677/5 Chinese Subsidiary (M) ¥2,470 30% ¥7.6887/5 b. Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reals and, subsequently, inducing an economic recession within the country. What would be the impact on Americo's consolidated EPS if the Brazilian reais were to fall in value to DE 2007/ith all athar naminne and nuchanan radar amaining the rama? a. After deducting taxes in each country, what are Americo's consolidated earnings and consolidated earnings per share in U.S. dollars? Calculate the business performance per country below: (Round to two decimal places. Round exchange rates to four decimal places.) U.S. Parent Brazilian German Business Performance (000s) Company Subsidiary Subsidiary Chinese Subsidiary Earnings before taxes (local currency) S R$ € Less corporate income taxes $ R$ * V Net profits of individual subsidiary S R$ Avg exchange rate for the period (fc/5) Net profits of individual subsidiary The consolidated earnings per share is $(Round to the nearest cent) R$3.0097/5, with all other earnings and exchange rates remaining the same? + b. Assume a major political crisis wracks Brazil, first affecting the value of the Brazilian reais and, subsequently, inducing an économic recession within the country. What would be the impact on Americo's consolidated EPS if the Brazilian reais were to fall in value to Calculate the business performance per country below. (Round to two decimal places. Round exchange rates to four decimal places.) U.S. Parent Brazilian Business Performance (000s) Company Subsidiary German Subsidiary Chinese Subsidiary Earnings before taxes (local currency) Less corporate income taxes S R$ $ R$

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter13: Valuation: Earnings-based Approach

Section: Chapter Questions

Problem 15PC

See similar textbooks