Use the following financial statement(s) to answer the questions below: Balance

Question

Use the following financial statement(s) to answer the questions below: Balance sheet of XYZ - Canada Cash CD 1000000 Debt 5000000 AR 3000000 Equity 6000000 FA 5000000 Inventory 2000000 CD 11000000 CD 11000000 Dollar Translation on May 31 CD2=$1 Cash CD 500000 Debt 2500000 AR 1500000 Equity 3000000 FA 2500000 Inventory 1000000 CD 5500000 CD 5500000 Suppose that in June the exchange rate becomes CD4 = 1$. Construct this organization’s June financials. Once financials are translated, elaborate upon why this information is important for managers to assess. Finally, how to changes in key metrics on the financial statements firm value? In your answer, please reference economic exposure.

Explanation / Answer

Preparation of June Financial:

Balance Sheet

Amount($) ASSETS Current Assets Cash 250,000 Account Receivable 750,000 Inventory 500,000 Total Current Assets 1,500,000 FA 1,250,000 Total Assets 2,750,000 LIABILITIES & EQUITY Liabilities Debt 1,250,000 Total Liabilities 1,250,000 Equity 1,500,000 Total Liabilities and Equity 2,750,000

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