Claims that you should ignore exchange rates when reviewing financials, or at least consider what would happen if there was no economic impact to exchanging currency. What if, say, you wanted to use that currency for something?
Aflac released its Q42012 earnings showing:
- revenues rising 6.6%, and
- net earnings rising about 8%.
Aflac is a bit self-conscious about how its financial reporting for its Japanese operations may impact its image, to wit:
“However, except for a limited number of transactions . . . the company does not actually convert yen into dollars. As a result, Aflac views foreign currency as a financial reporting issue and not as an economic event for the company or its shareholders. Because changes in exchange rates distort the growth rates of operations, readers of Aflac’s financial statements are also encouraged to evaluate financial performance excluding the impact of foreign currency translation.”
For example, Aflac shows about a 3.0% decrease in premium income and operating earnings as a result of the currency changes.