Offshore and Translation exposure: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Add link.)
 
imported>Doug Williamson
(Layout.)
 
Line 1: Line 1:
1.
Translation exposure refers to foreign exchange or currency risk. It is the risk of adverse effects in a firm’s reported financial statements, or related financial ratios or borrowing covenant compliance, resulting from changes in the rates at which foreign currency-denominated assets and liabilities are translated into the reporting currency. 


The siting of a currency asset in a location other than the country of which the currency is the domestic currency.
This applies most commonly to the translation of monetary assets and liabilities and to the consolidation of overseas subsidiaries into group financial statements.
If the changes in exchange rates were to reverse, the effects on the related amounts in the financial statements would normally also reverse.


For example, a holding of Japanese yen in the United States (which would also be known as 'Euroyen').
Also known as translation risk or translational exposure.




2.
== See also ==
* [[Accounting exposure]]
* [[Balance sheet exposure]]
* [[Currency risk]]
* [[Current/non-current method]]
* [[Economic exposure]]
* [[Foreign exchange risk]]
* [[Income statement exposure]]
* [[Transaction exposure]]


The term is also used in the context of transactions with a company resident in a tax haven, or about a company itself resident in a tax haven.


===Other links===
[http://www.treasurers.org/node/9528 Treasury essentials: Translation Risk, Will Spinney, The Treasurer, Nov 2013]


== See also ==
[[Category:Manage_risks]]
* [[CNH]]
* [[CNY]]
* [[Euro]]
* [[Euromarket]]
* [[Finance vehicle]]
* [[Offshore fund]]
* [[Onshore]]
* [[Reshore]]
* [[Tax haven]]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 09:21, 11 May 2015

Translation exposure refers to foreign exchange or currency risk. It is the risk of adverse effects in a firm’s reported financial statements, or related financial ratios or borrowing covenant compliance, resulting from changes in the rates at which foreign currency-denominated assets and liabilities are translated into the reporting currency.

This applies most commonly to the translation of monetary assets and liabilities and to the consolidation of overseas subsidiaries into group financial statements. If the changes in exchange rates were to reverse, the effects on the related amounts in the financial statements would normally also reverse.

Also known as translation risk or translational exposure.


See also


Other links

Treasury essentials: Translation Risk, Will Spinney, The Treasurer, Nov 2013

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Offshore&oldid=48434’