A US Company Has a Subsidiary Located in Great Britain

A U.S. company has a subsidiary located in Great Britain. If the British pound is the functional currency and is appreciating relative to the dollar, what will happen to the following ratios after translation? $$\begin{array}{l}\text { Debt-to-equity } \quad \text { Net profit margin }\\\begin{array} { l c c } \text { A) } & \text { Higher } & \text { Lower } \\\text { B) } & \text { Higher } & \text { Same } \\\text { C) } & \text { Same } & \text { Same } \\\text { D) } & \text { Lower } & \text { Higher }\end{array}\end{array}$$

A) Option A
B) Option B
C) Option C
D) Option D

Correct Answer:

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