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ISSN (print) 1136-0593 ยท ISSN (online) 2445-4192

A fuzzy model for accounting analysis about operating exposure to currency changes

Lucia Maria Portela de Lima Rodrigues. Universidade do Minho


This paper presents the development of a model for accounting analysis on operating exposure to currency changes using fuzzy logic as its primary inferencing technique. Assessing risk is one area which fuzzy set theory may be used to good advantage by accountants. Operating exposure to currency changes is characterised by vagueness and ambiguity because of the complex interaction between currency fluctuations and other factors affecting demand and competitiveness. Accountants have traditionally omitted from their analysis problems that cannot be measured. So, to measure this risk does not have been an important concern for accountants because of the ambiguity and subjectivity involved in the assessment process. However, the use of fuzzy logic permits consideration of the ambiguity and subjectivity in accounting problems.

This paper has two major goals. The first is to derive a mathematical model that allows accounting to express the potential effects of variations in the real exchange rates on the company's future profitability. The second goal is to test empirically this model. For this purpose we study the case of an organisational unit of Yarns in a large Portuguese textile company.

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