The Ausmo Group is an Australian company that reports its financial statements in Australian Dollar (AUD). The company conducts its business in USA in USD. The USD/AUD exchange rate was 1.50 when the company prepared its half-yearly financial statement. However, the USD/AUD exchange rate is currently 1-20 when the company reports its year-end result.
Is it an example of translation risk, economic risk or transaction risk for Ausmo Group? Explain briefly.

Question

The Ausmo Group is an Australian company that reports its financial statements in Australian Dollar (AUD). The company conducts its business in USA in USD. The USD/AUD exchange rate was 1.50 when the company prepared its half-yearly financial statement. However, the USD/AUD exchange rate is currently 1-20 when the company reports its year-end result.

Is it an example of translation risk, economic risk or transaction risk for Ausmo Group? Explain briefly.

Satt Academy · Accepted Answer

The Ausmo Group is an Australian company that reports its financial statements in Australian Dollar (AUD). The company conducts its business in USA in USD. The USD/AUD exchange rate was 1.50 when the company prepared its half-yearly financial statement. However, the USD/AUD exchange rate is currently 1-20 when the company reports its year-end result.

Is it an example of translation risk, economic risk or transaction risk for Ausmo Group? Explain briefly.

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