A new report from research firm McKinsey & Company says that inflation will kill shareholder value.
“At first glance, the effects of inflation on a company’s ability to create value might seem negligible,” the report notes.
“Yet a closer analysis reveals that to fend off inflation’s value-destroying effects, earnings must grow much faster than inflation — a target that companies typically don’t hit, as history shows.”
McKinsey researchers note that, during the mid-1970s to the 1980s, U.S. companies managed to increase their earnings by around 10 percent. (more)
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