THE EFFECTS OF INFLATION ON BUSINESS PROFITS AND BUSINESS ASSETS
THE EFFECTS OF INFLATION ON BUSINESS PROFITS AND BUSINESS ASSETS

Summary/Abstract: Inflation has various effects on the economic indices and business of companies. One of the most important problems, which is hardly examined in the literature, is its effects on the value of fixed assets and profits. In the literature, we can often find a mention of this problem, a general explanation for it, and annual estimations of the worth of different companies on the basis of certain accounting principles. The specialist literature, however, does not deal with the structural relationships of the deviations, and with the estimations based on them, in detail. This paper models the profit-correction on the basis of the accumulated effects of inflation, and the methods of estimation used for the inflationary revaluation of fixed assets and the inflationary loss of assets.

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