Lecture Notes

Topic: Real Growth in Revenue Adjusted for Inflation

Key Points:

• Real Growth in Revenue: 14.5%

  • When accounting for inflation over 8 years.
  • Inflation significantly impacts revenue growth.

• Comparing Over a Decade: Issues & Considerations

  • Important to differentiate between nominal and real growth.
  • Inflation can erode the apparent growth in revenue.

Example Analysis: Heisenberg Bush Revenue

• Revenue Growth: From $1,600M to $5,200M

  • Nominal growth rate: 32%.
  • Real growth rate (adjusted for inflation): 77%.

• Conclusion: Evaluate Growth in Real Terms

  • 77% nominal growth vs. 14.5% real growth.
  • Real growth provides a more accurate picture of revenue increase.

Consideration

• Nominal growth might be misleading due to high inflation rate.
• Choosing reasons other than nominal figures can provide a truer analysis of growth.