Inflation Accounting: Opportunities for Equity Investors

Opportunities in the Shadow of Inflation Accounting

The recent fluctuations in inflation have negatively impacted the income statements of many companies. In particular, firms with high receivables and accumulated inventories have faced challenges in cash management, reporting negative margins. However, with the removal of inflation accounting, these companies are showing potential for a more positive outlook in the coming period.

Reduction of Negative Effects

Despite the negative impact seen on the balance sheets of many firms leading to a deterioration in valuation ratios, it has caused a significant effect on market multiples. The agenda of removing inflation accounting is one of the factors that have encouraged the real appreciation of the Turkish Lira in the past two months. This situation has provided new hope for stocks that were negatively affected in the past.

Highlighted Companies

In recent evaluations, some companies with high net cash and successful collections have made significant strides towards overcoming the negative effects of inflation accounting. Compared to last year's data, especially the growth seen in inventory and receivables has caught the attention of investors.

Additionally, these companies have the potential to achieve high revenue margins in their market assessments. Investors should keep an eye on these firms affected by inflation accounting, as they may provide benefits in the future.

It is important to remember that the information presented here does not constitute investment advice. Do not neglect to conduct your own research when making investment decisions.