The Effect Of Foreign Exchange Rate On The Performance Of Dangote Cement Ethiopia Plc.

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.