Foreign Currency Fluctuations and Revenue Boeing Corporation has considerable no

Question

Foreign Currency Fluctuations and Revenue Boeing Corporation has considerable non-U.S. operations. The table below shows Boeing's 2015 revenue by geographic segment along with related exchange rates at the beginning and end of the year The exchange rates represent the foreign currency equivalent of $1. USD exchange rate Year ended December 31, 2015 ($ millions) Revenue 01/01/15 12/31/15 $13,433 12,248 12,556 10,846 2,601 1,870 0.7543 0.8266 6.2025 3.6729 3.5046 1.1618 1,398 1.5642 15.5159 1,875 14.7414 17.2494 0.7063 0.9203 6.4952 3.6729 4.3044 1.3847 China Total non-US, revenues 56,827 39,287 $96,114 Required a. Most of Boeing's contracts are denominated in SUS. Assume instead that Boeing wrote contracts for its international customers in their respective domestic currencies. For simplicity, assume the contracts were written on January 2, 2015, and revenue was collected and recognized on December 31, 2015. Use the exchange rate information in the table to calculate the effect on Boeing's 2015 revenue if contracts had been denominated in the various foreign currencies

Explanation / Answer

To Calculate effect of Different currencies , we have to convert all revenue on 2 jan to different currencies and than convert back to $ on 31 dec to see the effect of change in revenue.

To convert $ into rupee we will multiply by the exchange rate and to convert it back we have to divide it by closing exchange rate.

Hence Revenyue from non us contracts = 54514.0715$

Revenue from us contract = 39287

Total Revenue = 93801.0715

Decrease in revenue = 2312.929

Particulars Revenue 01/01/2015 12/31/15 Net change in revenue Ex rate Amt in forien curr. Ex rate Amount in $ Asia other than china 13433 0.7543 10132.5119 0.7063 7156.5931 912.9038 Europe 12248 0.8266 10124.197 0.9203 11000.9745 (1247.025) China 12556 6.2025 77878.59 6.4952 11990.1758 (565.824) Middle east 10846 3.6729 38936.273 3.6729 10846 0 Oceania 2601 3.5046 9115.4646 4.3044 2117.708 (483.29) Canada 1870 1.1618 2172.566 1.3847 1578.979 (3010204) Africa 1398 11.5642 16166.752 15.5159 1041.9474 (356.0526) Latin america 1875 14.7414 27640.125 17.2494 1602.381 (272.618) Total 56827 193066.48 54514.0715 (2312.92)

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