A group of companies controlled from the UK includes subsidiaries in Country X, Y and Z. It is forecast
that, at the end of the month, intra-company indebtedness will be as follows:
- Subsidiary in X will be owed X$144,381,000 by the subsidiary in Y and will owe the subsidiary in Z an amount of Z$1,060,070.
- Subsidiary in Y will be owed Y$14,438,000 by the subsidiary in Z and will owe it Z$800,000
Suppose you are given the following exchange rates:
X$:£ = 68.10
Y$:£ = 10.215
Z$:£ = 1.415
What are the net payments to be made in respect of the above balances, and what are the possible advantages and disadvantages of such multilateral netting?
Subsidiaries in Country X, Y, and, Z Subsidiary X X$144,381,000 Subsidiary Y Y$14,438,000 Subsidiary Z... View the full answer