Exchange rates fluctuations can make analysis of data variances look better or worse based on favorable or unfavorable exchange rates rather than the actual performance metrics. In accounting terms, constant currency eliminates exchange rate fluctuations when comparing different sets of data to give you an accurate picture of your business's performance.
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How Virtual Versions Work
Virtual versions allow you to report the variances between the original exchange rate version and the virtual version without having to consider how exchange rate fluctuations impact the data.
To enable constant currency, create a virtual version. A virtual version is a read-only composite of a base version, used for the data, and an exchange rate version, used for the rates to translate the base version data. You can choose an exchange rate set from another version or a different time period, such as the prior year. In the new virtual version you see the base version's data, modified by the exchange rate you chose. Now, the exchange rate of the virtual version and the original version is constant.
To report on variances with constant currency, always build the report with the new virtual version and the version you chose for the exchange rate of the new virtual version. The time spans you define in your report must relate to the time spans of the data sets. The table below explains how these rules work together:
|Variances to Report||Virtual Version Base||Virtual Version Exchange Rate Version||Versions in Report||Time Span in Report|
|Current Budget to Current Year Actuals||Current Year Actuals||Current Budget||Virtual Version and Current Budget||Current Year|
|Current Year Actuals to Prior Year Actuals||Current Year Actuals||Prior Year Actuals (Offset Actuals 1 year backwards)||Virtual Version and Prior Year Actuals||Current and Prior Year|
Basic Steps to Create Constant Currency Reports
- Choose the sets of data.
- Create a virtual version with a base a version and an exchange rate version.
- Build a matrix report, comparing the variance between the virtual version and the exchange rate version.
The walk-through below offers a detailed step-by-step sample of how to create this report.
Constant Currency Walk-Through Sample
In the sample walk-through, you build a report that shows the variance between the 2016 budget data and 2016 actuals data, using virtual versions to keep the currency rates constant.
Create the Virtual Version
- Go to Modeling > Model Management > Versions.
Click anywhere in the plan section of the list.
Click Create New Virtual Version .
Actuals at Budget Ratesin the Name field.
From the Base Version dropdown, choose Actuals.
- Click the Edit link to the right of the Exchange Rates.
- In the pop-up window, select the 2016 Budget (Current Budget) from the dropdown.
- Click Apply.
Click Save .
You now have a virtual version of your actuals data with your budget's rates.
Build a Variance Report without Exchange Rate Fluctuations
To report the variance between the actuals data and the current budget without exchange rates fluctuations:
- From Reporting, click New Report > Matrix from the dropdown.
From the Elements list, click Versions, and drag and drop the Actuals at Budget Rates virtual version into the column segment.
- Drag and drop the 2016 Budget (Current Budget) version (the version you used for the exchange rate of the virtual version) in the same column to right.
- Click Back to Elements and click Time. Expand until you find 2016 (the time period that corresponds to the base you selected for the virtual version). Keep 2016 collapsed and drag and drop it into the column segment, above your versions. You can also expand it to see quarterly or monthly variances, or you can drag it into the Filters segment.
- Click Back to Elements and click Calculations. Drag and drop the Difference element to the left of the two versions in the column segment.
- Right-click on the difference element in the report grid and select Properties.
True Variancein the Label field and click the Reverse Sign checkbox.
- Click the Difference Options tab.
- In the Subtract Version section, choose the current Budget from the Version dropdown. In the From Version section, choose Actuals at Budget Rates from the Version dropdown.
- Click Apply.
- Click Back to Elements and click Accounts.
- Drag and drop PL Income, PL COGS, PL Expense and Net Income into the row segment. Your report should look like this:
- Save and run the report. The variance in the last column reports the difference without the effects of exchange rates.