Accounting Measures of Foreign Exchange Exposure: The Long and Short of It

Abstract

CEHANGES in exchange rates subject the firm with international operations to potentially important risks. If a U. S. firm contracts to purchase machinery and to pay in marks and the mark is revalued prior to settlement, the firm incurs an exchange loss. If a U. S. firm issues debt securities denominated in francs and the franc is revalued, an exchange loss arises. Measuring the ex