What Benefit Does Converting Sales and Profits to Constant Dollars

question 66

Multiple Choice

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 adjusted for inflation to make them comparable over years.
• D) It is easier for the financial analyst to judge the effectiveness of management's decision-making.
• E) It provides a method that is familiar and easy to understand.

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