Foreign exchange translation risk, also known as accounting risk, refers to the risk that the parent company changes the financial statements of overseas subsidiaries denominated in foreign currency into consolidated statements denominated in the currency of the parent company at the end of the fiscal year. The risk of foreign exchange translation refers to the risk that the local currency value of the company's foreign currency-related assets or liabilities will change adversely on the balance sheet due to exchange rate fluctuations.

Impact of foreign exchange risk:

1. Impact on cash flow: soft money, location of subsidiary.

2. Bank loans: book losses are not conducive to bank loans.

3. Stock price: It affects future company profits and market price-earnings ratio, thus affecting valuation and price.

Influencing factors of foreign exchange risk:

1. Percentage of performance of companies operated by overseas subsidiaries.

Two. Countries (regions) where overseas subsidiaries are located

Three. Accounting method used for business report summary: 1. Current/non-current project method. 2. Monetary/non-monetary project law. 3. Tense method. 4. Current exchange rate method.