Question

Thornton Corporation has extensive liabilities denominated in Cyprus pounds resulting from imports from Cyprus. However, Thornton's revenues are denominated solely in U.S. dollars. Therefore, Thornton Corporation does not have translation exposure. Group of answer choices True False

Answer 1

Answer: True

Step-by-step explanation:

Translation exposure is also referred to as translation risk and this is when there will be a change in the value of the equities, assets, income or liabilities of a company due to the changes in the exchange rate. This typically happens when a portion of the

equities, assets, income or liabilities, of the company is denominated in foreign currency.

Since Thornton's revenues are denominated solely in U.S. dollars, therefore, Thornton Corporation does not have translation exposure.