Example: Rate is Divisor - Euro Currencies

This topic provides an example for European currencies when using the Rate is Divisor field.

Note: If the domestic currency is not Part of Euro and the Euro currency itself does not have Rate is Divisor set to Yes, the Euro triangulation conversion method is unchanged.

Foreign to Domestic Example

Your domestic currency is the Deutsche mark (DEM) and you have received a 100,000,000 Won payment from a South Korean company. The system will convert the amount to Euros (EUR) and then to DEM.

The DEM currency is Part of Euro. The Rate is Divisor field for the Won-EUR currency is set to Yes and the Won currency is not Part of Euro.

The DEM-EUR rate is 1.9557989 DEM to 1 EUR. The Won-EUR rate is 942.89 Won to 1 EUR. Because the Rate is Divisor field is set to Yes, you enter the exchange rate in the Exchange Rate fields as the amount of EUR to one Won (in this case, 0.0010605).

The system calculates the conversion as follows:

Domestic amount = Foreign amount * Won-EUR * DEM-EUR

or

DEM = 100,000,000 * 0.0010605 * 1.9557989

The resulting amount of DEM is 207,412.47.

Domestic to Foreign Example

Your domestic currency is the Deutsche mark (DEM) and you need to invoice a South Korean company for a 100,000 DEM product. The system will convert the amount to EUR and then to Won.

Assume the exchange rates from the above example still apply.

The system calculates the conversion as follows:

Foreign amount = Domestic amount / DEM-EUR / Won-EUR

or

Won = 100,000 / 1.9557989 / 0.0010605

The resulting amount of Won is 48,213,108.11.