A U.S. company has a subsidiary located in Great Britain. If the British pound is the functional currency and is appreciating relative to the dollar, what will happen to the following ratios after translation? $$\begin{array} { | l | c | c | }
\hline & \text { Debt/Equity } & \begin{array} { c }
\text { Net Profit } \
\text { Margin }
\end{array} \
\hline \text { A) } & \text { Higher } & \text { Lower } \
\hline \text { B) } & \text { Higher } & \text { Same } \
\hline \text { C) } & \text { Same } & \text { Same } \
\hline \text { D) } & \text { Lower } & \text { Higher } \
\hline
\end{array}$$

Question

A U.S. company has a subsidiary located in Great Britain. If the British pound is the functional currency and is appreciating relative to the dollar, what will happen to the following ratios after translation? $$\begin{array} { | l | c | c | } 
\hline & \text { Debt/Equity } & \begin{array} { c } 
\text { Net Profit } \
\text { Margin }
\end{array} \
\hline \text { A) } & \text { Higher } & \text { Lower } \
\hline \text { B) } & \text { Higher } & \text { Same } \
\hline \text { C) } & \text { Same } & \text { Same } \
\hline \text { D) } & \text { Lower } & \text { Higher } \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of A U.S. company has a subsidiary located in Great Britain. If the British pound is the functional currency and is appreciating relative to the dollar, what will happen to the following ratios after translation? $$\begin{array} { | l | c | c | } 
\hline & \text { Debt/Equity } & \begin{array} { c } 
\text { Net Profit } \
\text { Margin }
\end{array} \
\hline \text { A) } & \text { Higher } & \text { Lower } \
\hline \text { B) } & \text { Higher } & \text { Same } \
\hline \text { C) } & \text { Same } & \text { Same } \
\hline \text { D) } & \text { Lower } & \text { Higher } \
\hline
\end{array}$$

A US Company Has a Subsidiary Located in Great Britain