Each topic must be 1.5 pages and 3 scholarly sourcesTopic 1: Define the terms "foreign exchange exposure risk" and "functional currency." Select a global company that uses IFRS. Review their footnotes...

Accounting        4
ACCOUNTING
Table of Contents
Topic 1:    3
Topic 2:    4
References    6
Topic 1:
    Foreign exchange exposure risk is the risk which have a financial impact occurs mainly due to fluctuations in the exchange rates. This risk is also known as the exchange rate risks of the company. Hence, due to the foreign exchange exposure risks, there is a huge impact on the business’s financial position as well as its financial performance. This is caused mainly due to some changes in the exchange rates or the currencies. There are different types of foreign exchange risks such as transaction risks, economic risk and translation risk. Further, foreign exchange exposure risk is a major concern for the exporters and the importers along with the business houses which trades in the international parlance (CFI, 2022).
    A functional currency is known as the major or main currency with which a company operates its business operation. Further, a business house conducts business with multiple organization and transact the business with many currencies. Yet the company reports its financial statement in only one currency. Hence, all the foreign currencies which are earned or expended by the company needs to be converted into functional currency (Kenton, 2020).
    The company which we have chosen is Reckitt and the footnotes according to the IFRS of the company with respect to the foreign exchange risk states that the total net revenue at actual exchange rates declined by 5.4% which was mainly due to the impact of Merger and Acquisition of -3.8% along with 5.1% foreign exchange headwinds. Further, adjusted diluted earnings per share of the company was 288.5p as on 2021 which was down by 11.8% and was lower than 2020 which was mainly due to the lower adjusted operating profits along with an adverse impact of the foreign exchange...