A US parent company has subsidiaries in France, Germany, UK and Italy. The amounts due to and from the affiliates is converted into a common…
CA Final · Advanced Financial Management · RTP · November 2026
A US parent company has subsidiaries in France, Germany, UK and Italy. The amounts due to and from the affiliates is converted into a common currency viz. US dollar and entered in the following matrix. Inter Subsidiary Payments Matrix (US $ Thousands) Paying affiliate Receiving affiliate France Germany UK Italy Total France 80 120 200 400 Germany 120 80 160 360 UK 160 120 140 420 Italy 200 60 120 380 Total 480 260 320 500 1560 The treasurer of US Parent company is suggesting that by applying Multilateral Netting system the company can save a lot of transfer/ exchange costs. The company's Board agreed with Treasurer's proposal. From the information given above, choose the correct answer to the following questions:
Suggested Answer and Working Notes:
Correct Answer: Option (B)
1. I. II. III.
Topics: Interest Rate Risk Management
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