Translation exposure: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Administrator (CSV import) |
imported>Doug Williamson m (Category added 9/10/13 and spacing) |
||
| Line 5: | Line 5: | ||
Also known as translation risk or translational exposure. | Also known as translation risk or translational exposure. | ||
== See also == | == See also == | ||
| Line 15: | Line 16: | ||
* [[Income statement exposure]] | * [[Income statement exposure]] | ||
* [[Transaction exposure]] | * [[Transaction exposure]] | ||
[[Category:FX_Risk]] | |||
Revision as of 13:36, 9 October 2013
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.
