P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
  • P&L (Profit & Loss) Constant Currency Analysis Excel Model
Originally published: 24/11/2019 14:35
Last version published: 13/04/2020 09:22
Publication number: ELQ-16910-3
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P&L (Profit & Loss) Constant Currency Analysis Excel Model

Best practice to assess the impact of FX on a P&L for a business trading in different currencies

Description
This best practice allows the user to analyse and understand the impact of Foreign Exchange movement on the P&L of a company which trades in multiple currencies.

After the foreword, the first tab presents a P&L with each fiscal year side by side for comparison. On the right of the table, movement in absolute numbers and in percentage are here to assess for each year the impact of historical FX vs. constant FX (ie. what was the impact of currency movement between historical rate and today's rate).

The second tab present side by side one P&L at historical FX rate and one P&L at Constant FX rate. This will allow the user to understand better the operational efficiencies or the movement in Margin with and without the impact of the FX movement.

The last three tabs, (one for each financial year), include a P&L broken down by original currency and allows to compute P&L by currency at historical rate and P&L by currency at constant FX rate.

Please note that the template has been built assuming P&L was reported in USD dollars, but everything can very easily be changed to suits your particular needs.

This will allow you to easily build bridges with a lot of insight, without being biaised by the currency impact.

This Best Practice includes
1 Excel file with 8 tabs

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Further information

Assess the impact of exchange rate variation on profitability. Separate transaction effect vs. translation effect.

Financial due diligence. Reporting. Multiple currency analysis. Understanding operations on a constant currency basis.

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  • Lê Tuấn(last updated: 02/12/2019 10:04)

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Discussion feed for P&L (Profit & Loss) Constant Currency Analysis Excel Model

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  • BCalori
    We use avg period rates to book expenses - what would be the latest available spot rate to compare to the historical fx (as recorded)? I'm unclear what would be considered the latest "spot rate". Your knowledge would be very helpful to me. Thank you.
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    • Pierre-Alexandre HEURTEBIZE
      Hi B.
      The "appropriate" way to do things really depends on the objective you are trying to achieve and the context in which your booking occur. Constant currency analysis is generally done to have a better idea of how the business has been operating historically assuming the fx rates were all constant. This is often an interesting analysis to do when you are trying to acquire a business, in which case you generally take the most recent FX rate to have a better understanding of expected margin % in the short term.
      The "latest spot rate" is simply the latest known FX rate. If I look at the US / EUR rate today for instance it stands at 0.89. This is the latest spot rate.
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