Blundell Biotech Earnings Analysis 2014
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Questions and Answers

What is the corporate income tax percentage for the Brazilian subsidiary?

  • 40%
  • 25% (correct)
  • 30%
  • 35%

    • NexusTech’s effective tax rate is below 35%.

    True

    What is the EBT in USD for the Chinese subsidiary?

    $323

    For the German subsidiary, the EBT in local currency is _____ euros.

    <p>4,500</p> Signup and view all the answers

    Match the subsidiaries with their respective EBT in USD:

    <p>Brazilian Sub = $3,472 German Sub = $6,412 Chinese Sub = $323 Parent = $4,500</p> Signup and view all the answers

    What was Blundell Biotech's consolidated earnings in 2013 in U.S. dollars?

    <p>$834.08M</p> Signup and view all the answers

    The exchange rate used for converting Japanese net income to USD in 2013 was 97.57¥/$.

    <p>True</p> Signup and view all the answers

    What were the consolidated earnings for Japan in 2013?

    <p>$15.37M</p> Signup and view all the answers

    How much was Blundell Biotech's net income in the U.S. for 2014?

    <p>$382M</p> Signup and view all the answers

    The consolidated earnings increased by $47.86M from 2013 to 2014 on a constant currency basis.

    <p>False</p> Signup and view all the answers

    What was the percentage change in consolidated earnings from 2013 to 2014 on an actual basis?

    <p>+5.74%</p> Signup and view all the answers

    Blundell Biotech's consolidated earnings in 2014 totaled _______ in U.S. dollars.

    <p>$881.94M</p> Signup and view all the answers

    Match the following net incomes with their respective currencies:

    <p>¥1,500 = Japanese Yen £100.0 = British Pound €204 = Euro CNY168 = Chinese Yuan ₽124 = Russian Ruble $360 = US Dollar</p> Signup and view all the answers

    In 2014, the consolidated earnings for Russia were _____ million USD.

    <p>3.00</p> Signup and view all the answers

    If the same exchange rates from 2014 were applied to both years, what would the 2013 earnings for Europe on a constant currency basis be?

    <p>$271.08M</p> Signup and view all the answers

    Which exchange rate would have been used to convert British net income to USD in 2014?

    <p>1.6473$/£</p> Signup and view all the answers

    What was the change in corporate earnings from 2013 to 2014 when evaluated at the 2014 exchange rates?

    <p>$47.86M</p> Signup and view all the answers

    The total change in corporate earnings on a 'constant currency' basis from 2013 to 2014 resulted in a decrease.

    <p>False</p> Signup and view all the answers

    What was the net income from European operations in 2013?

    <p>€204</p> Signup and view all the answers

    Match the Years with the Changes in Consolidated Earnings:

    <p>2013 = $834.08M 2014 = $881.94M</p> Signup and view all the answers

    A portfolio that goes up 10% and then falls 10% has the same final value as before.

    <p>False</p> Signup and view all the answers

    What is the primary effect of foreign exchange rate changes on earnings?

    <p>They increase local currency earnings by 0.76%</p> Signup and view all the answers

    According to the Theory of Comparative Advantage, trade can make both trading partners better off economically.

    <p>True</p> Signup and view all the answers

    Name one benefit of specialization through international trade.

    <p>Maximizing output</p> Signup and view all the answers

    Comparative advantage assumes _______ competition and free trade.

    <p>perfect</p> Signup and view all the answers

    Match each term with its description:

    <p>Comparative Advantage = Maximizing economic output through specialization International Trade = Exchange of goods and services between countries Globalization = Integration of markets and cultures across borders Terms of Trade = Conditions under which goods are exchanged</p> Signup and view all the answers

    Which of the following is NOT a limitation of the Classical Comparative Advantage model?

    <p>Providing costless information</p> Signup and view all the answers

    According to the IMF, international trade does not necessarily improve living standards in all participating countries.

    <p>True</p> Signup and view all the answers

    The growth of international trade since _______ has been significant.

    <p>1960</p> Signup and view all the answers

    What is the main motivation for multinational enterprises (MNEs) to invest abroad?

    <p>Market seekers</p> Signup and view all the answers

    Every individual or company benefits from globalization and international trade.

    <p>False</p> Signup and view all the answers

    Name one category listed that drives multinational enterprises to invest abroad.

    <p>Market seekers</p> Signup and view all the answers

    The first phase of the globalization process involves successful ____ operations.

    <p>domestic</p> Signup and view all the answers

    Which phase involves joint ventures and part ownership of a foreign subsidiary?

    <p>Phase 3</p> Signup and view all the answers

    Match the following categories of international trade motives with their descriptions:

    <p>Market seekers = Looking for new customers Raw material seekers = Desiring access to resources Production efficiency seekers = Enhancing output at lower costs Knowledge seekers = Acquiring new technologies</p> Signup and view all the answers

    Market imperfections create additional opportunities for multinational enterprises.

    <p>True</p> Signup and view all the answers

    The lowest risk approach to international business is _____.

    <p>Import/Export</p> Signup and view all the answers

    Study Notes

    Blundell Biotech Consolidated Earnings

    • Blundell Biotech’s consolidated earnings in 2013 were $834.08 million.
    • Blundell Biotech’s consolidated earnings in 2014 were $881.94 million.

    Constant Currency Analysis

    • The change in corporate earnings on a constant currency basis from 2013 to 2014 was a 4.94% increase.
    • The change in actual consolidated earnings from 2013 to 2014 was a 5.74% increase.
    • The 2014 exchange rates were used for both 2013 and 2014 for the constant currency analysis.
    • The change in consolidated earnings on a “constant currency” basis is $41.49 million from 2013 to 2014.

    Comparative Advantage

    • The theory of comparative advantage assumes free trade and perfect competition.
    • The theory of comparative advantage assumes that there is no uncertainty and costless information.
    • The theory of comparative advantage assumes that there is no government interference.
    • The benefits of specialization are realized through international trade.
    • Comparative advantage shifts over time.

    Globalization and International Trade

    • International trade is the exchange of goods and services between countries.
    • International trade is a driver of international capital flows.
    • International trade is subject to government control.
    • International trade has grown tremendously since 1960.

    Motives for Going International

    • Market seekers seek to expand their markets to new countries.
    • Raw material seekers seek to access raw materials in new countries.
    • Production efficiency seekers seek to improve their production efficiency by taking advantage of lower production costs in new countries.
    • Knowledge seekers seek to access new knowledge and technology in new countries.
    • Political safety seekers seek to diversify their operations and reduce political risk.

    The Five Step Globalization Process

    • The five step globalization process starts with successful domestic operations.
    • The five step globalization process then moves to international trade.
    • The five step globalization process then moves to the multinational phase.
    • The five step globalization process culminates in the wholly owned subsidiary abroad.

    NexusTech

    • NexusTech's consolidated global corporate income tax amount in USD is $5,104.
    • NexusTech's effective tax rate is 34.7%
    • Brazil, German, and Chinese, subsidiaries of NexusTech have an average exchange rate of R$1.8, €0.7018, and ¥7.75 respectively.

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    Description

    Explore the consolidated earnings of Blundell Biotech from 2013 to 2014, including insights on constant currency analysis and growth percentages. Understand the application of comparative advantage in global trade and how it relates to corporate performance. Test your knowledge on these financial concepts and their implications.

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