a quick one when calculating exposure = equity for all current method do we include retained earnings with the common stock?thanks
I believe so, yes. Exposure for AC is shareholders Equity which would include Retained Earnings.
Exposure (All Current) = Shareholders Equity (so yes, RE is included too…)
just asking cause i did a qbank and it did not include it probably it was a mistake
Hey florin you doing FSA tonight? I started reviewing too… right from Page-1, so do throw in random questions and we could work it out…
I got my stuff going on my laptop so I don’t get hooked on AF but if i find intersting Q will post
One for warm up Hann Company is a U.S. multinational firm with operations in several foreign countries. Hann has a 100 percent stake in a French subsidiary. The foreign subsidiary’s local currency has appreciated against the U.S. dollar over the latest financial statement reporting period. In addition, the French firm accounts for inventories using the FIFO inventory cost-flow assumption. The net profit margin as computed under the current rate method would most likely be: A) higher than the same ratio computed under the temporal method. B) lower than the same ratio computed under the temporal method. C) either higher or lower than the same ratio computed under the temporal method. D) equal to the same ratio computed under the temporal method
Should be B right…
LC appreciates … So HR < AR < CR NPM = NI/S All Curr NI -> AR S -> AR NPM = same Temporal NI -> Mix (here COGS and DEP use both HR) … FIFO old units sold, so COGS use old HR (low) … so NI will be high S -> AR NPM = higher So B??
apparently C is the answer look in your secret sauce at page 68 they say all profitability ratios are uncertain
the foreign currency gain or loss appears on the income statement under the temporal method. Hence, to make tany determinations regarding the movements of this ratio we need more information regarding the net monetary asset or liability position as of both the beginning and ending balance sheet date
wow … good question!
tricky…
On Schweser’s quick list it says: Regarding Temp vs. A/C If LC appreciating, asset turnover, gross PM, interest coverage, leverage are all higher under Temp method…
yes but secret sauce says net profit margin roe and roa is uncertain
ahhhhh… good to know…thanks
if they gave me more info I still wouldn’t know the impact
chadtap Wrote: ------------------------------------------------------- > On Schweser’s quick list it says: > > Regarding Temp vs. A/C > > If LC appreciating, asset turnover, gross PM, > interest coverage, leverage are all higher under > Temp method… i got fooled by this one too…but chad…the quicksheet says Gross PM, not Net profit Margin…so it’s not really contradicting that answer dammit - if cfa has this all over the exam…i’ll be pissed…!
mumu is definitely on top of the game…
damn Schweser and their tricky a$$ questions…