RDFEM

PRESENTATION

BY: MAN ISHA HIRAWAT

 Translation Exposure
O Translation exposure, sometimes called
accounting exposure, measures the effect of an
exchange rate change on published financial
statements of a firm.
 Measurement of Translation
Exposure
O Translation exposure can often depict a distorted representation of a company’s
international holdings if foreign currencies depreciate considerably compared
to the home currency.
O Consequently, there are four methods of measuring translation exposure:
1. Current/Non-current Method
2. Monetary/Non-monetary Method
3. Current Rate Method
4. Temporal Method
 Operating Exposure
O The Operating Exposure refers to the extent
to which the firm’s future cash flows gets
affected due to the change in the foreign
exchange rates along with the price changes.