Monday April 28 2014
Panasonic recorded a profit for the first time in three years.
As we deal almost exclusively in US Dollars, I doubt most students appreciate the war of currencies going on around the world. An analyst would want to examine whether Panasonic made a profit on a falling yen or more profitable products. Here is why.
Most of Panasonic sales are outside Japan. When Pany brings the money back, harvested in other currencies, it has to convert those currencies back to yen. If the yen has been rising against other currencies, there are fewer yen represented by what were profits. Now a falling yen results in more yen per unit of foreign currency.
This is why currency hedges, accounted for in Other Comprehensive Income, are so important.
Professor Elam 
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