Springfield plc, based in the UK, has a cost of goods sold attributable to foreign material orders that exceeds its foreign revenue. All foreign transactions are denominated in the foreign currency of concern. This firm would ____ a stronger pound and would ____ a weaker pound.

Question

Quizplus · Accepted Answer

Springfield plc would benefit from a stronger pound because it would reduce the cost of foreign material orders when converted to pounds. Conversely, a weaker pound would increase the cost of these foreign material orders, adversely affecting the firm.

Springfield Plc, Based in the UK, Has a Cost of Goods