Effects of inflation accounting on organizational decisions and financial performance in South African retail stores

  • Received August 14, 2020;
    Accepted October 5, 2020;
    Published November 16, 2020
  • Author(s)
  • DOI
  • Article Info
    Volume 18 2020, Issue #4, pp. 85-95
  • Cited by
    3 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

The inflation accounting technique allows a business to show or have a sensible picture of their gains due to present cost coordinates with present revenues. Thus, the effects of inflation accounting on organizational decisions and financial performance of Kwa-Zulu Natal retail stores were evaluated in this study. The study used a quantitative research method. A total of 161 completed questionnaires were received from respondents in the selected 20 listed stores in Kwa-Zulu Natal. Thus, the Exploratory Factor Analysis and linear regressions were employed in this study. The empirical study reveals how inflation accounting significantly impacts organizational decisions and financial performance of the retail business with such coefficients (F (1, 159) = 49.269, p < .0005; F (1, 159) = 28.959, p < .0005). The findings of this study highlighted positive relationships between the variables that were used. Thus, the study recommends that retail stores always consider inflation changes and apply inflation accounting techniques to make adjustments to produce more accurate results in their financial statements. Heated discussions now surround the basis of financial performance measurement via historical cost accounting. This influences their decision making and financial performance positively.

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    • Figure 1. Conceptual framework
    • Figure 2. Gender of participants
    • Figure 3. Work designation
    • Table 1. Sampling adequacy
    • Table 2. Factor: Organizational Decision (OD)
    • Table 3. Factor: Usefulness of Inflation Accounting Technique (UIA)
    • Table 4. Factor: Inflation Accounting Technique (IAT)
    • Table 5. Factor: Performance Monitor (PM)
    • Table 6. Factor: Standpoints Considered when Introducing Performance Measurement (SC)
    • Table 7. Factor: Non-Financial Performance Measures (NFP)
    • Table 8. Factor: Employee Performance Review (EPR)
    • Table 9. Influence of inflation on organizational decisions
    • Table 10. Effects of inflation accounting on financial performance
    • Conceptualization
      Odunayo Olarewaju, Brian Ngiba
    • Data curation
      Odunayo Olarewaju, Mzwandile Mbambo
    • Investigation
      Odunayo Olarewaju, Mzwandile Mbambo, Brian Ngiba
    • Supervision
      Odunayo Olarewaju, Brian Ngiba
    • Writing – review & editing
      Odunayo Olarewaju, Brian Ngiba
    • Methodology
      Mzwandile Mbambo, Brian Ngiba
    • Writing – original draft
      Mzwandile Mbambo, Brian Ngiba