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Dear Tutor,
Referring to the question 2013 June Q1(II): Evaluate the current strategic performance report and the choice of performance metrics used (appendix 1)The answer given stated:
Year on year growth figures given but no inflation figures is given ? how to know the figures show in the report is inflated figures ?Thanks
Well, financial results as recorded will always include inflation because you record the cash flows, actual selling prices etc.
Therefore, you can’t, for example, say that an increase in sales revenue means that a company has done well as the increase could simply be an inflationary effect. Even if inflation = 0% anyone interpreting performance would need to know that before drawing conclusions.
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