Company X is a U.S.-based IT company with operations and earnings in anumber of foreign countries. The company's profits by subsidiary, in localcurrency (in millions), are shown in the following table for 2019 and 2020.Net IncomeJapanese SubsidiaryBritih Subsidiary2019JPY 200GBP 100.002020JPY 1,480GBP 108.40The average exchange rate for each year, by currency pairs, is the following.Exchange RateUSD = 1 GBPJPY = 1 USD201997.571.5646202090.881.6473Use the above data, Students answer the following questions.a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020?b. If the same exchange rates are used for both years, what is the change incorporate earnings on a "constant currency" basis?c. Using the results of the constant currency analysis in part b, is it possibleto separate Company X's growth in earnings between local currencyearnings and foreign exchange rate impacts on a consolidated basis?

The aim of consolidated profit is to express situation and results that controls other companies.

Use the above data, Students answer the following questions. a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020? b. If the same exchange rates are used for both years, what is the change in corporate earnings on a "constant currency" basis? c. Using the results of the constant currency analysis in part b, is it possible to separate Company X's growth in earnings between local currency earnings and foreign exchange rate impacts on a consolidated basis?

Use the above data, Students answer the following questions. a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020? b. If the same exchange rates are used for both years, what is the change in corporate earnings on a "constant currency" basis? c. Using the results of the constant currency analysis in part b, is it possible to separate Company X's growth in earnings between local currency earnings and foreign exchange rate impacts on a consolidated basis?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Company X is a U.S.-based IT company with operations and earnings in a
number of foreign countries. The company's profits by subsidiary, in local
currency (in millions), are shown in the following table for 2019 and 2020.
Net Income
Japanese Subsidiary
Britih Subsidiary
2019
JPY 200
GBP 100.00
2020
JPY 1,480
GBP 108.40
The average exchange rate for each year, by currency pairs, is the following.
Exchange Rate
USD = 1 GBP
JPY = 1 USD
2019
97.57
1.5646
2020
90.88
1.6473
Use the above data, Students answer the following questions.
a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020?
b. If the same exchange rates are used for both years, what is the change in
corporate earnings on a "constant currency" basis?
c. Using the results of the constant currency analysis in part b, is it possible
to separate Company X's growth in earnings between local currency
earnings and foreign exchange rate impacts on a consolidated basis?

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