conversion rates

Examples of conversion rates in the following topics:

• Calculating the Cash Flow Cycle

  • =Inventory conversion period + Receivables conversion period – Payables conversion period
  • In calculating each of these three constituent conversion cycles, we use the equation TIME =LEVEL/RATE (since each interval roughly equals the TIME needed for its LEVEL to be achieved at its corresponding RATE).
  • Inventory conversion period: Rate = COGS, since this is the item that (eventually) shrinks inventory.
  • Receivables conversion period: Rate = revenue, since this is the item that can grow receivables (sales).
  • Payables conversion period: Rate = [inventory increase + COGS], since these are the items for the period that can increase "trade accounts payables" (i.e., the ones that grew its inventory).

• NPV Profiles

  • The NPV Profile graphs the relationship between NPV and discount rates.
  • Thus, when discount rates are large, cash flows further in the future affect NPV less than when the rates are small.
  • Conversely, a low discount rate means that NPV is affected more by the cash flows that occur further in the future.
  • A special discount rate is highlighted in the IRR, which stands for Internal Rate of Return.
  • It is the discount rate at which the NPV is equal to zero.

• Overview of Exchange Rates

  • An exchange rate between two currencies is the rate at which one currency will be exchanged for another.
  • In finance, an exchange rate (also known as the foreign-exchange rate, forex rate, or FX rate) between two currencies is the rate at which one currency will be exchanged for another.
  • Conversely, if the foreign currency is strengthening, the exchange rate number increases and the home currency is depreciating.
  • There are many factors that impact exchange rates, such as inflation, interest rates, balance of payments, and government policy.
  • This is presented by a higher exchange rate if the exchange rate is quoted as home currency / 1 foreign currency.

• Real Versus Nominal Rates

  • Real exchange rates are nominal rates adjusted for differences in price levels.
  • An exchange rate between two currencies is defined as the rate at which one currency will be exchanged for another.
  • The real exchange rate is the purchasing power of a currency relative to another at current exchange rates and prices.
  • The real exchange rate is the nominal rate adjusted for differences in price levels.
  • Using the PPP rate for hypothetical currency conversions, a given amount of one currency has the same purchasing power whether used directly to purchase a market basket of goods or used to convert at the PPP rate to the other currency and then purchase the market basket using that currency.

• Fertility

  • There are a number of different approaches to measuring fertility rate—such as crude birth rate (CBR), general fertility rate (GFR), child-woman ratio (CWR), total fertility rate (TFR), gross reproduction rate (GRR), and net reproduction rate (NRR).
  • TFR equals the sum for all age groups of 5 times each ASFR rate.
  • The TFR (or TPFR—total period fertility rate) is a better index of fertility than the crude birth rate because it is independent of the age structure of the population, but it is a poorer estimate of actual completed family size than the total cohort fertility rate.
  • Gross reproduction rate (GRR) is the number of girl babies who would be born to a woman completing her reproductive life at current age-specific fertility rates.
  • Conversely, other countries have policies to reduce the birth rate, such as China's former one-child policy.

• Fixed Exchange Rates

  • A fixed exchange rate is a type of exchange rate regime where a currency's value is fixed to a measure of value, such as gold or another currency.
  • Another, method of maintaining a fixed exchange rate is by simply making it illegal to trade currency at any other rate.
  • Some countries, such as China in the 1990s, are highly successful at using this method due to government monopolies over all money conversion.
  • China is well-known for its fixed exchange rate.
  • It was one of the few countries that could impose a fixed rate by making it illegal to trade its currency at any other rate.

• Evaluating Interest Rates

  • Debtors management involves identifying the appropriate credit policy -- i.e. credit terms which will attract customers -- such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and, hence, return on capital (or vice versa).
  • Interest rates can affect this decision because of the time value of money.
  • Short-term financing involves identifying the appropriate source of financing, given the cash conversion cycle.
  • Interest rates of working capital financing can be largely affected by discount rate, WACC and cost of capital.
  • Evaluate a company's interest rates based on its stage of development

• Overview of Convertible Securities

  • Although a CB typically has a coupon rate lower than that of similar, non-convertible debt, the instrument carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's equity value.
  • The investor receives the potential upside of conversion into equity while protecting the downside with cash flow from coupon payments and the return of principal upon maturity.
  • Conversion price: The nominal price per share at which conversion takes place.
  • Conversion ratio: The number of shares each convertible bond converts into.
  • Conversion premium: Represent the divergence of the market value of the CB compared to that of the parity value.

• The Practice of Conversation

  • When writing for an academic community, one must take into consideration the current scholastic conversation that exists on that topic.
  • This essay introduction states a problem, provides a current, real-world context, presents an opposing view, and then states the writer's argument: "In the current debate about time limits for unemployment benefits in the U.S., there is no consensus on the structural conditions that govern unemployment rates.
  • As these cowboys are demonstrating, the practice of conversation is important.
  • Similar to actual spoken conversation, the practice of conversation in writing requires that you decide who the audience is.
  • Write as though you are contributing to an ongoing academic conversation in your field

• International Exchange of Money

  • In finance, an exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another.
  • The spot exchange rate refers to the current exchange rate.
  • The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date .
  • The foreign exchange market assists international trade and investment by enabling currency conversion.
  • In finance, an exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another.