Two recurrent words in fourth-quarter earnings releases have been “currency translation.” Currency translation is the conversion of revenues, expenses and earnings realized in a foreign currency into U.S. dollars for reporting purposes. Depending on exchange rates, currency translations can be either a positive or a negative.
Last quarter, the euro was a notable negative. The euro fell from than $1.263 per dollar to about $1.216 per dollar. As the quarter progressed, each dollar of sales realized in Europe was worth less and less when converted to the greenback.