The Effects of Exchange Rates on Multinational Firms Profitability
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Date
2023-09-13
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Uganda Christian University
Abstract
This study examines the impact of exchange rates on the profitability of multinational firms. Through a comprehensive analysis of financial data and case studies, it investigates how fluctuations in exchange rates influence key financial metrics, such as revenue, costs, and overall profitability. The findings shed light on the complex relationship between exchange rate movements and multinational firm performance, highlighting both potential advantages and challenges. The study contributes to a deeper understanding of the global business environment and offers insights that can inform strategic decision-making for multinational corporations.
The purpose of the study was to examine the relationships between foreign exchange on profitability of Multinational Firms, case of coca cola. A cross sectional survey design with a population of 56 respondents from which a sample of 54 was drawn and undertaken. Self-administered questionnaires were used to collect responses. Measurement of the relationships of the study were done and subjected to rigorous data processing and analysis using the relevant statistical computer software packages.
Findings indicated that there were positive and significant relationships between foreign exchange rate and the profitability of Coca cola. Results from correlation analysis revealed that foreign exchange rate has a strong impact on the profit margin of an organization. In conclusion, the findings revealed that all the independent variables were significant predictors of profitability reduction as a result of foreign exchange rate.
The results demonstrate a positive correlation (r=0.834) between rising interest rates and rising exchange rates. Consequently, a shift in interest rates was responsible for 80% of the changes in exchange rates. Findings also demonstrate the importance of low inflation. Given a 0.000 p value and a coefficient of 0.742 that demonstrates that it explains a.0742 variation in the rate of inflation, a country that exhibits a higher value of its currency when there is low inflation is considered to be significant.
Description
This is a dissertation.