RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Cad : USD
TheCount11 wrote: lets focus on this
"Ttm Sales are down y/y in nominal terms so by definition it is also down in volume too."
Example
A jewelry store did $1,000,000 in sales last year and $900,000 this year.
One can assume this year they sold less rings based on revenues. I am saying that might not be true.
1) They might have sold the same number of rings but with smaller diamonds.
2) They might have sold the same rings as the year before but had to discount them.
Without "matching" rings any inflation and "real" price claims are dubious.
sales = number of transactions * price per transaction
The price per transaction is manipulated by the inflation rate so we hold it constant. The best way to illustrate this example is a company that only sells one product. Let's say they sell dresses of the same type. If we don't hold the price of the product constant due to changes in the product mix then this argument wouldn't apply.
Ex: $100 dress increases by 20% due to inflation so it now sells for $120. The company sold 1000 dresses in year 1 and achieved sales of $100k. In year 2, inflation increased the price tag per item so the company reported sales of $108k.
Revenue (year1) = 1000* $100 = $100k
Revenue (year2) = 900* $120 = $110
In this example, sales increased but it was due to
inflation with the price of dresses rising from $100 to $120. Notice that the volume of transactions decreased from 1000 to 900. This could simply mean that consumers are cutting back on discretionary spending.
Changes in product mix from year to year would obviously change the outcome.
Anyway, the point is that "real" sales is a much better indicator for the strength of the underlying business. High inflation rates from year to year can make it appear the company is doing well when in fact it's mostly just inflation.