Lesson 4 of 6
Growth that is a currency move
Two exchange rates are needed, not one. A company reporting in yen can grow 6.5 percent and shrink in dollars, and the ratios that cancel currency keep working.
By Javier Sanz
Founder of ValueScreener. Built Ninety Nine, a securities services provider, and sold it to a tier-one global bank; ran operations and internationalization at Alpaca, the brokerage API.
Who writes thisEditorial processLinkedIn (opens in a new tab)X (opens in a new tab)
In one minute
- A US-listed foreign issuer trades in one currency and reports in another, so two separate rates are needed and using one for both breaks the ratios.
- Ratios built only from statements keep working, because the currency cancels inside them. Ratios that divide a price by a filed figure do not.
- Where no rate exists the price-over-statement figures are withheld with a reason rather than computed on a guess.
Currency is where a foreign issuer's numbers quietly stop meaning what they appear to mean, and the failure is not obvious because every figure still looks like a number.
One company, three figures published and one withheld
- Return on equity, percent13.26
- Net margin, percent9.92
- Debt to equity1.09
- Price to earningsn/a
Two rates are in play, and only one of them is ever anything but 1.00.
| What is being converted | Rate used here | Why |
|---|---|---|
| Toyota's statements, yen to dollars | 0.00644666, read 2026-09-15 | Every figure read from a filed statement |
| Unilever's statements, euro to dollars | 1.15405, read 2026-09-15 | The same |
| Enbridge's statements, Canadian dollars | 0.71846, read 2026-09-15 | The same |
| Any of their prices | 1.00 | They trade in dollars, like the whole of this market |
Why one rate is not enough
The statements come in the reporting currency and the price comes in the trading currency, and for a US-listed foreign issuer those are different. Applying the price's rate to the statements, or the reverse, produces a ratio whose numerator and denominator are in different money.
The consequence is not small. On the old single-rate handling here, a Chinese issuer filing 51.55 in its own currency of earnings against a 127.89 dollar price was published as a 2.29 times price to earnings business, which then sorted to the top of a value ranking, because cheap ranks well.
What survives, and what does not
| Figure | Does the currency cancel |
|---|---|
| Net margin, return on equity, return on capital, debt to equity | Yes: both sides come from the same statements in the same currency |
| Price to earnings, price to book, enterprise value to EBITDA, earnings yield | No: a dollar price against a filed figure in another currency |
| Earnings per share, book value per share, free cash flow in currency | No: absolute money in the reporting currency |
That is the figure at the top of this lesson, explained: three ratios of filed figures to filed figures, where the yen cancels, and one that divides a dollar price by a yen earnings figure.
Where no rate can be found for a pair at all, every figure in the second and third rows is withheld with the reason recorded, rather than computed at a rate of one.
The growth rate that is a currency move
Both numbers are correct and they answer different questions. The reporting currency series says what the business did. The dollar series says what a dollar investor's claim on it did, which mixes the business with the currency.
This product converts every year of a company's filed history at one dated rate, so a growth rate computed here is the reporting-currency growth rate: the rate cancels. A growth figure from anywhere else may or may not, and the way to tell is to ask which rate was applied to which year.
The measure that refuses outright
The ten-year inflation-adjusted earnings ratio is withheld for any company reporting in another currency, with the reason recorded as a home-currency problem. On 2026-09-16 that refusal applied to 8 companies.
The reason is that the measure restates ten years of earnings using US consumer prices. US consumer prices do not measure inflation in yen, so restating a Japanese company's yen earnings with them would be a mixture of two different measurements rather than a real-terms series.
Check yourself
Why does a US-listed foreign issuer need two exchange rates?
- To hedge the position
- Because it trades in dollars and reports in another currency, so the price and the statements need different conversions
- Because the fiscal year differs from the calendar year
Show the answer
Answer: B.
Using one rate for both is what produced a 2.29 times price to earnings ratio on a company whose earnings were in another currency entirely.Which figures still compute when a company reports in another currency?
- Price to earnings and price to book
- Ratios built only from the statements, such as margins, return on equity and debt to equity
- None of them
Show the answer
Answer: B.
Inside a statement-only ratio the currency genuinely cancels, so those are published as normal while the price-crossing ones are withheld.A company's revenue grew 6.5 percent in its own currency and fell 2.6 percent in dollars. Which is right?
- The dollar figure, because the shares trade in dollars
- Both: one measures the business and the other mixes the business with the currency
- The reporting currency figure, always
Show the answer
Answer: B.
They answer different questions. What matters is knowing which one you are reading and which rate was applied to which year.Sources
- The product's stored conversion records for the named companies, read 2026-09-16, each carrying the rate, the currency pair and the session it was observed on.
- The product's own documented defect and its repair: a single rate applied to both the price and the statements produced a 2.29 times price to earnings ratio on a company reporting in another currency.
- Shiller's cyclically adjusted earnings ratio, which restates a decade of earnings using consumer prices, and is therefore refused for a company reporting outside those prices' currency.
What this leaves out
- The two-currency arithmetic in the worked example uses round invented exchange rates so the effect can be checked by hand. The revenue figures are real; the rates are not.
- A single conversion rate across a ten-year history removes the currency from growth rates and also removes any real currency effect a dollar investor experienced.
- Exchange rates here are dated to the session they were read and change nightly.
- Nothing here is advice about any security.