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ZA group consists of a french company, a US and UK company. ZA has the following inter-company transactions for the first half of the year.
Paying Subs —- UK US French
Receiving Subs
UK 0 £2M £1M
US $1.8M 0 $0.6M
French €3.3M €4.84M 0ZA has decided to implement a system of multilateral netting using Pounds as settlement currency.
Exchange rates:
Euro 1.1 per Pound
$1.2 per PoundSir, we need to find the total receipts and total payments in Pounds. I am extremely confused as to how to find the net payments.
Can you please help me with the same?
Thank you!
Using the US subsidiary to explain:
They are receiving 2M UK pounds and €4.84M.
Convert the € to UK pounds and add them up to get the total UK pound receipt.The are paying a total of $2.4M so convert this to UK pound to get the total UK Pound payment.
The different between the total UK receipts and total UK payments is the net UK Pound receipt or payment.
Do the same exercise for the UK subsidiary and the French subsidiary 🙂
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