Working capital management in multinational company

10. Multinational working capital management Aa Aa Multinational companies are exposed to complex management and allocation of their resources. A multinational company's cash management, credit management, inventory management, and so on, need to have several additional elements factored in compared with those of a purely domestic corporation. Consider this case: Multinational Inventory Management Streep Inc. is a U.S.-based multinational firm with a subsidiary in Switzerland. Last week, Streep created its periodic financial statements, and the subsidiary had Decisions related to amount of investment in inventory and inventory policy need to factor in the following: SFr 60,000 worth of inventory on its balance sheet. Streep translated the value of inventory using the spot Exchange rates exchange rate at that time of $0.8153 / SFr and recorded that value on its consolidated balance sheet. Possibility of import and export quotas or tariffs However, this week the exchange rate changed Tax consequences dramatically to $0.8925 / SFr. The subsidiary still has the Possibility of at-sea storage same amount of inventory (valued at SFr 60,000). If the firm were to create a new consolidated balance sheet and translate the value of its inventory at the new spot exchange rate, what would happen to the dollar value of inventory? It would decrease by $5,558. It would increase by $4,632. It would decrease by $4,632. It would increase by $5,095 The change in inventory value was created purely by accounting and exchange rate factors, because the subsidiary still has the same inventory and assets in place. However, this change would affect Streep's consolidated financial statements and ratios. Assuming no other changes occurred, what effect would this have on Streep's quick ratio? The quick ratio increases with increase in inventory value. The quick ratio does not change.