What benefit does converting sales and profits to constant dollars in times of inflation offer when analyzing a case?
A) It is helpful in predicting the future potential of the organization.
B) It contributes to determining the risk factors when computing the Z-value.
C) It shows the true performance of the corporation in comparison with that of the industry or the economy in general.
D) It is easier for the financial analyst to judge the effectiveness of management's decision-making.
E) It provides a method which is familiar and easy to understand.

Question

Quizplus · Accepted Answer

Converting sales and profits to constant dollars removes the effects of inflation, allowing for a more accurate comparison of a corporation's performance over time and against industry or economic benchmarks.

What Benefit Does Converting Sales and Profits to Constant Dollars