Abstract:
It is true that due to the globalization of business and frequent fluctuations in exchange rates,
information about the impact of changes in exchange rates on individual companies’ and
multinational groups’ financial position and profitability has become increasingly important.
Data on the translation effects of foreign currency transaction, a company’s exposure to
different types of foreign exchange risks and taken currency hedging measures enable many
users of accounting contents to obtain a better picture of an entity’s financial position and its
profitability, then make decision accordingly. This research intended to evaluate the effect of
foreign currency fluctuation on performance of Dangote Cement Ethiopia Plc taking into
account Six years data from 2015 to 2020. The research is qualitative types and data analysis
is conducted by making use of tables, graphs, diagrams and where appropriate Excel was used.
Data used for this research was both primary through interview and secondary from the books
of accounts and audited financial statement of the company. Performance was measured with
profitability analysis over time and operational performance with how long operation interrupt
as result of lack of accessing foreign currency. The paper has significance of assessing the
problem in foreign currency transaction and its financial reporting and performance
evaluation. Dangote Cement Ethiopia was materially affected by foreign currency movement
in Ethiopia to the extent that the equity of the company became negative in 2016 and 2020,
which put the company’s going concern into question. The company was operationally
profitable but as result of loss on foreign currency exchange the company was continuously in
challenge.
