Companies such as Coca-Cola generate more than half their annual revenues from sales outside the United States, including Europe. If the dollar gets stronger relative to the euro, what will be the financial impact on the company?
A) Overall earnings will increase
B) Earnings will decrease in euros, but increase in dollars
C) Overall earnings will decrease
D) Earnings will increase in euros, but decrease in dollars

Question

Quizplus · Accepted Answer

A stronger dollar means that when the company converts its euro earnings back to dollars, it will receive fewer dollars for the same amount of euros, leading to a decrease in overall earnings.

Companies Such as Coca-Cola Generate More Than Half Their Annual