For example, if a U.S.-based MNC with a subsidiary in Mexico
expects the peso to appreciate in value relative to the U.S. dollar, local customers’
accounts receivable would be increased and accounts payable would be reduced
if at all possible. Because the dollar is the currency in which the MNC parent will
have to prepare consolidated financial statements, the net result in this case
would be favorably to increase the Mexican subsidiary’s resources in local currency.
if at all possible.