2. Aspen Skiing Company operates ski resorts across the U.S. It does its business in U.S....

2. Aspen Skiing Company operates ski resorts across the U.S. It does its business in U.S. dollars. It has nothing to do with foreign currencies. Should it worry about the value of U.S. dollar? Why?

Expert Solution

Since the company does its business in USA and operates resorts in USA it's income and expenditure are all in US dollars. Hence taking this perspective it should not worry about the value of the US dollar since both of them happen in USA. However there are some reasons to consider:
If the company is based outside US, then it shall be worried i.e. it has corporate office outside USA or it has to repatriate its earnong outside USA, only then shall it worry. In that case a stronger US dollar shall be favourable to it because it can repatriate more of its domestic currency
The other reason is if it's clientele is majorly outside of USA. Then a weak US dollar will induce them to spend more by increasing their purchase power. This will be so because they will get more USD for their own currency.

Hence we can see that even though the company may be based wholly in USA, there are reasons why it should be concerned about exchange rate of US dollar

jeff jeffy answered 9 months ago

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