exchange rate effect: net income

CFA Level II
#1

when ask exchange rate effect on net income, why use average rate? thanks.

#2

Was this part of the 2006 CFAI exam? I think I had a similar question on one of the problems.

#3

Because your sales and expenses (parts of NI) were incurred throughout the year. Thus the average rate for the year.

#4

thanks. is it the same reason for exchange rate effect on operating income? thanks. when we see this kind of problem, it dose nothing to do with temporal method or all current method. is it? Thanks. wanderingcfa Wrote: ------------------------------------------------------- > Because your sales and expenses (parts of NI) were > incurred throughout the year. Thus the average > rate for the year.