Is it true or false – Sometimes Canadian companies will report their results in U.S. dollars?
The correct answer and explanation is:
Answer: True
Explanation:
It is indeed true that sometimes Canadian companies report their financial results in U.S. dollars (USD). This practice occurs for several strategic and practical reasons.
Firstly, many Canadian companies operate in or have significant business dealings with the United States, which is Canada’s largest trading partner. Because the U.S. dollar is widely used in international trade and finance, reporting results in USD can provide a clearer and more relevant financial picture to investors, partners, and customers, especially if a substantial portion of the company’s revenues or costs are in U.S. dollars.
Secondly, some Canadian companies may choose to report in U.S. dollars to appeal to a broader investor base. The U.S. capital markets are large and liquid, and many investors prefer or require financial statements in USD to compare companies more easily across borders without the added complexity of currency conversion. By using USD, Canadian companies can potentially attract more U.S. investors and improve access to capital.
Thirdly, companies with listings on U.S. stock exchanges (e.g., the NYSE or NASDAQ) might report in U.S. dollars to comply with regulatory requirements or investor expectations. This aligns their reporting with the currency used by the majority of investors and analysts following the company.
However, it is important to note that Canadian companies typically report in Canadian dollars (CAD) because that is their functional currency—the currency of the primary economic environment in which they operate. Reporting in USD is usually a strategic choice rather than a requirement.
In summary, while the default is to report in Canadian dollars, it is true that sometimes Canadian companies report results in U.S. dollars due to cross-border operations, investor relations, stock exchange requirements, or to facilitate easier comparison with U.S. companies.