FX impact: Illustrative scenario

Discover how a change in the EUR/USD rate affects your purchase cost, EBITDA, company valuation and distributable dividend.

Fictional company, for educational purposes. No personalised advice.

Revenue

10 000 000 €

Purchases in USD

4 000 000 $

The importing SME invoices its clients in euros but buys its components in dollars. When the euro weakens against the dollar, those purchases mechanically cost more: the cost price rises, and the effect flows all the way to the shareholders’ dividend.

Actual EUR/USD rate

1.05001 EUR = 1.0500 USD

Budgeted EUR/USD rate

1.1000

0.90 (weak euro)1.30 (strong euro)

The euro is weaker than planned in the budget: your dollar purchases cost more.

4.8 %

Cost price of purchases

3 809 524 €

+173 160 € vs budget

14.4 %

EBITDA

1 026 840 €

−173 160 € vs budget

14.4 %

Valuation (× 6)

6 161 039 €

−1 038 961 € vs budget

17.3 %

Distributable dividend

248 052 €

−51 948 € vs budget

Impact on financial performance

EBITDA

−173 160 €

−14.4 %

Valuation (× 6)

−1 038 961 €

−14.4 %

Distributable dividend

−51 948 €

−17.3 %

Moving from a rate of 1.1000 to 1.0500, the importing SME's EBITDA shifts by −173 160 € (−14.4 %). At a multiple of 6×, this moves the valuation by −1 038 961 € and the distributable dividend by −51 948 €.

Budgeted EBITDA1 200 000 € → 1 026 840 € at the actual rate

Budgeted valuation7 200 000 € → 6 161 039 € at the actual rate

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