Example: Rate is Divisor

This topic provides an example for the Rate is Divisor field.

Foreign to Domestic Example

Your domestic currency is the South Korean Won and you have received a 500,000 USD payment from a US company. The system will convert the amount to Won.

Assume the Rate is Divisor field is set to Yes and neither currency is Part of Euro (Part of Euro makes the conversion process somewhat different).

The exchange rate is .0008771 USD to 1 Won. Because Rate is Divisor is set to Yes, you enter the exchange rate in the Exchange Rate fields as the amount of Won to one USD (in this example, 1140 Won).

The system calculates the conversion as follows:

Domestic amount = Foreign amount * Exchange Rate

or

Won = 500,000 * 1140

The resulting amount of Won is 570,000,000.

Domestic to Foreign Example

Your domestic currency is USD and you must invoice a South Korean company for a 100,000 USD product. The system will convert the amount to Won.

The exchange rate is 1140 Won to 1 USD. Because Rate is Divisor is set to Yes, you enter the exchange rate as .0008771 USD to 1 Won.

The system calculates the conversion as follows

Foreign amount = Domestic amount / Exchange Rate

or

Won = 100,000 / .0008771

The resulting amount of Won is 114,012,085.28.