Abstract
The primary objective of this research paper is to show the major role which the foreign exchange rates play in international business, and the impact they have on the international operations of the multinational corporation. | With this objective in mind, the topic outline of the present research paper was developed. The outline recognizes the fact that the problems associated with international business are not strictly limited to one field of study. Therefore, I endeavored to deal with these problems from the economics, management, accounting, and finance standpoints; with an emphasis on the latter two. This course of analysis has been followed so that the reader can relate to the subject of foreign exchange rates more effectively. | As we all know, the international business system has no fixed geographical boundaries like the national business system, which has well-defined framework of objectives and territorial boundaries. Therefore, it is conceptually appropriate to conceive the various array of problems associated with the international operations of the multinational corporation. This paper makes an effort to point out these problems, and to show how they affect decisions regarding foreign investments. | From a financial management approach, the paper deals with the systematic procedures followed in translating the financial statements of a subsidiary into U.S. dollars, and the effect of the foreign exchange rates on the profit performance of the subsidiary. Thus, furnishing management with an analytical tool on decisions pertaining to the profitability of foreign investments. | An attempt has been made to show the recent Financial Accounting Standards Board (FASB) pronouncements on this subject, so that the reader would be able to see the framework of guidelines which governs the accounting and financial treatment of the multinational corporation's foreign operations. | Toward the end of this research study, an analysis was made to explain some of the ways by which we can minimize the risk impact of foreign exchange rates; and based on the current trends and development of the monetary systems of the world, I gave a forecast of the future trends and mechanism of foreign exchange rates. | It is my hope, that this research paper will serve the purpose of providing the reader with an adequate analysis of the subject of foreign exchange rates and the multinational corporation.