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?

Solutions

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 1 month ago

Next > < Previous

Related Solutions

. You are a business consultant to the Northern Virginia snow skiing industry. Wintergreen Ski Resort...

. You are a business consultant to the Northern Virginia snow skiing industry. Wintergreen Ski Resort has asked for your help this coming season to determine business strategy and how to create a plan for realizing maximum profit. Using economic analysis, what advice would you give management for the times to open and close the season? (Extra Credit for 10 possible points)

Skiable Acres operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season

Skiable Acres operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 10% return on investment on the company's $270,000,000 of assets. Skiable Acres projects fixed costs to be $31,000,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $8 per guest. Last year, due to its favorable reputation, Skiable Acres was a price-setter and was...

Mount Snow operates a mountain ski resort. The company is planning its lift ticket pricing for...

Mount Snow operates a mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 16% return on the company’s $109 375 000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $35 000 000 for the ski season. The resort serves about 700 000 skiers and snowboarders each season. Variable costs are about $12...

SnowDream operates a rocky Mountain ski resort. The company is planning its lift tickets pricing for...

SnowDream operates a rocky Mountain ski resort. The company is planning its lift tickets pricing for the oming ski season. Investors would like to earn a 16% return on the company $115 million of assets. The company incurs primarily fixed costs to be 35,600,00 for the ski season. The resort serves about 800,000 skiers and snowboarders each season. Variable costs are $8 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control...

Aspen Company estimates its manufacturing overhead to be $1,121,000 and its direct labor costs to be...

Aspen Company estimates its manufacturing overhead to be $1,121,000 and its direct labor costs to be $590,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $178,000. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $303,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $128,000. Actual...

Aspen Company estimates its manufacturing overhead to be $631,250 and its direct labor costs to be...

Aspen Company estimates its manufacturing overhead to be $631,250 and its direct labor costs to be $505,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $195,600. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $326,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $130,400. Actual...

Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be...

Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be $500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2, had actual direct labor costs of $195,000. Job 2-2, which was completed, but not sold at the end of the year, had actual direct labor costs of $325,000. Job 2-3, which is still in work-in-process inventory, had actual direct labor costs of $130,000. Actual...

Problem G The Walt Disney Company operates several ranges of products from theme parks and resorts...

Problem G The Walt Disney Company operates several ranges of products from theme parks and resorts to broadcasting and other creative content. The following balance sheet and supplementary data are for The Walt Disney Company. The Walt Disney Company Consolidated Balance Sheet (in millions) For Year Ended September 30 Assets Cash and cash equivalents $ 842 Receivables 3,599 Inventories 702 Film and television costs 1,162 Other 1,258 Total current assets $ 7,563 Film and television costs,...

Marilyn Edwards is the CEO of a mid-sized proprietary limited company. This company operates its business...

Marilyn Edwards is the CEO of a mid-sized proprietary limited company. This company operates its business both online and at physical outlets. The business has been enjoying consecutive growth both in sales and profit for the last seven years. However, compared to the growth of sales net, operating profit growth seems lower. Marilyn appointed an analyst to explore the reasons for this inconsistency. The analyst came up with many interesting findings including: the business has been suffering from chronic physical...

FORco, a foreign corporation, operates a U.S. branch that derives all of its income from U.S....

FORco, a foreign corporation, operates a U.S. branch that derives all of its income from U.S. business operations. During its first year of operations, the branch has $20 million of income effectively connected to the U.S. operations and distributes all of its after-tax earnings to FORco. Assume no change in U.S. net equity during the year, a U.S. corporate tax rate of 21%, and a U.S. withholding rate for U.S.-source dividends is 5%. Assume the applicable treaty provides a rate...

Subjects