Table of Contents
Overview
When given exchange rates, you can either multiply or divide the foreign currency by the exchange rate. Different countries may have preferences or standard practices regarding how they quote exchange rates. Two methods can be applied depending on the local conventions and practices:
Indirect: applied when choosing Divide in the Operator dropdown for a currency.
Direct: applied when choosing Multiply in the Operator dropdown for a currency.
Indirect Method: Divide
Following this method, the home currency, in this case the Maltese one, is normally shown as '€1 =', however much the foreign currency is. The foreign currency's exchange rate follows the '=' sign in the formula:
E.g. €1 = $1.5
For this scenario, we divide the amount we receive in foreign currency by the foreign currency rate to work out it's value in the home currency.
So a Maltese company receives $150. To know how much it will be in € (home currency) we divide $150 by $1.5, which will give us €100.
So $150 are equal to €100.
Direct Method: Multiply
This method shows the foreign currency as $1 and equals it to the home currency's value for that amount.
E.g. $1 = €0.67
Here, we will multiply the amount we receive in foreign currency by the home currency rate.
So a Maltese company receives $150. To know how much it will be in € (home currency) we multiply $150 by €0.67, which will give us €100.
So $150 are equal to €100.
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