Variables such as transfer pricing and exchange-rate fluctuations do not influence profitability patterns.

Question

Quizplus · Accepted Answer

Transfer pricing and exchange-rate fluctuations can greatly affect a company's profitability, as they can impact the costs of inputs and the prices of exports and imports. For example, if a company sets transfer prices that are artificially low, it may reduce its tax liability in one country but increase it in another, potentially affecting overall profitability. Similarly, if a company's home currency strengthens against its foreign currencies, its exports may become more expensive and less competitive, potentially reducing profitability.

Variables Such as Transfer Pricing and Exchange-Rate Fluctuations Do Not