Financial management

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mohil (Querist)
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13 December 2013 how can inflation rate be different for cash inflows and outflows? like, for cost it is 7% & for revenue it is 10% how this happens please explain.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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13 December 2013 Dear Mohil,

it depends on the mix. expenses can have a different product mix facing lower inflation whereas revenues can have a different mix.

Even the normal inflation rate declared by govt, has different components facing different price increase.

mohil

mohil (Querist)
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13 December 2013 can u tell me link or a site where i can get a detailed explanation for this?
because i don't get it

Nikhil Kaushik

Nikhil Kaushik (Expert)
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13 December 2013 ok take an example: if the input is coal where the price rise is 7% and the output is electricity where the increase in tariff is 10%, then the inflation on expense shall be 7% and inflation in revenue shall be 10%.

I hope this suffice. If not, google it!

mohil

mohil (Querist)
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13 December 2013 okay i got an idea about it.
thanks

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