currency translation

Definition

To change the value of one currency into a value of a foreign currency. In order to do this, a company must have information such as the currencies in question and the exchange rates. Currency translation is especially important for multinational corporations or businesses that might operate in areas with different local currencies. For example, a large corporation planning its yearly revenue projections could use currency translation to bring the currency used at the home office to the relevant local currency (for instance, U.S. dollar to Euro). The company could also translate revenues from the foreign subsidiary, as well as other foreign divisions, into U.S. dollars to compare the numbers to a domestic portion of the company. See also group currency.