Inflation-Adjusted Revenue

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How fast have companies grown over the last year? Inflation-adjusted revenue is the only way to know, yet few companies do it.

Inflation-Adjusted Revenue

We have previously written about inflation’s impact on corporate management. Inflation-adjusting the top line is the first item on the CEO’s agenda.

How to inflation-adjust revenue? There are two methods:

1. A time-consuming and precise approach: Take revenue in each country and deflate it in local currency with local inflation. Then consolidate by weighting by the size of each country. (An outside analyst cannot use this method since data is unavailable.)
2. A quick and reasonable approach: Take global revenue and deflate it with the home country’s inflation. This works because exchange rates incorporate differential inflation between operating countries and the home country. However, there may be other factors that affect the exchange rate, so this is less precise than method #1.

We use method #2 here, while incorporating the regional mix from quarterly reports.

What do we see? We looked at large FMCG companies and somewhat or largely consumer-oriented tech companies.

Tellusant's FoX product includes an inflation module 
that can be used to adjust the revenue streams, 
and much more.