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Multinational Companies - Essay Example
Pages 12 (3012 words)
Multinational companies are defined as business firms that operate in two or more countries with international sales and a multinational mix of managers and owners. This definition alone carries with it implications and ramifications that differentiates with the financial arrangements of a domestically based firm…
Because currency exchange rates fluctuate on a daily (minute-to-minute) basis, clean and easy apples-to-apples comparisons of U.S. dollars to Euros or Yen may not be possible, especially with systems that deal with data on an intraday basis. Tracking the profitability of products in varying markets will fall short of expectations unless data stores and currency tables that contain detailed exchange rates and valuation dates are properly integrated into the general warehouse or operational data store. Many currencies will be tracked against other currencies - the simplest being home currency versus the single currency of the trade/deal/transaction - using parallel fields for each denomination in the appropriate warehouse tables. Thus, if a transaction took place in Japan (in Yen), multiple fields that represent the event would have both U.S. dollars and Yen denominations that communicate up-to-date or restated exchange rates. The business firm must also be aware that the location of the transaction does not always unequivocally define the currency of the transaction. Many financial events such as currency swaps and spots will fall into this category, making it more laborious to correctly portray the financial picture of the business.
Unexpected changes in the values of foreign ...
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