5. Earnings assessment
The parent’s decision about whether a foreign subsidiary should reinvest earnings in a foreign country or remit earnings back to the parent may be influenced by exchange rate forecasts.
If a strong foreign currency is expected to weaken substantially against the parent’s currency, the parent may wish to quickly remit the subsidiary’s earnings before the foreign currency weakens.
Forecasts useful for forecasting an MNC’s earnings. When earnings of an MNC are reported, subsidiary earnings are consolidated and translated into the currency representing the parent firm’s home country.