For some reason my brain is scrambled today.
So if we have a company that is overseas and the functionaly currency and local currency are the same both the foreign currency we’d use the current rate method. Ok easy. Now if we are looking at how this would affect the ratios:
The USD at the beginning of the year was 1.35$/ 1 foreign currency, at the end of the year it’s .95$/ 1 foreign currency, 1.1$ is the average i.e. the dollas has appreciated. The qustion is this, compared to using the temporal method:
The Asset Turnover will be higher
The Receivables turnover will be higher
Current Ratio will be higher.
? I thought logically assets woudl be lower using temporal and the assets would be higher using current. Apparently the answer is asset turnover but I have nfc why.