Why some US firms take one big hit on Venezuelan businesses
New York
AMERICAN companies tired of seeing their earnings badly hurt by Venezuela's crumbling bolivar currency system, can - with the stroke of a pen - get rid of much of the problem.
But it means writing down the value of their Venezuelan businesses to nothing or next to nothing. And that can come with a big one-time charge.
Ford Motor Co wrote off its entire investment in Venezuela last month when it took an US$800 million pre-tax writedown, the company said in response to questions from Reuters. That means no matter how much worse things get in Venezuela, it shouldn't have to take further impairment charges.
By taking the hit all at once, it allows Ford to avoid the drip-drip of losses from Venezuela that have hurt the earnings of some of the biggest American companies in the past year. It also means the carmaker keeps a foothold in what was once a promi…
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