Impact of Inflation Rate on Gross Revenue of Companies in Australia

Running head: PROFESSIONAL PROJECT
Professional Project
Name of the student
Name of the university
Author note

1PROFESSIONAL PROJECT
Executive Summary
This report has analyzed the impact of inflation rate on gross revenue of companies belonging to
different sector in Australia. The findings of the study shows that there is negative impact
between the inflation rate and gross revenue of companies. Companies prefer to inflation rate to
be low and stable but in developed countries like Australia, moderate inflation is required for
increasing economic growth and the results have been similar to the expectation.

2PROFESSIONAL PROJECT
Table of Contents
1.0 Introduction................................................................................................................................4
1.1 Background of the study........................................................................................................4
1.2 Research Aim.........................................................................................................................5
1.3 Research Questions................................................................................................................5
1.4 Research Hypothesis..............................................................................................................6
2.0 Literature Review......................................................................................................................6
2.1 Concept of Inflation Rate and Gross Revenue......................................................................6
2.2 Impact of inflation rate on gross revenue..............................................................................7
3.0 Research Methodology..............................................................................................................9
3.1 Research philosophy..............................................................................................................9
3.2 Research Approach................................................................................................................9
3.3 Research Design..................................................................................................................10
3.4 Data Collection and Analysis..............................................................................................10
3.5 Sampling..............................................................................................................................10
3.6 Reliability and Validity........................................................................................................11
3.7 Ethical consideration...........................................................................................................11
4.0 Findings and Analysis..............................................................................................................12
Analysis.....................................................................................................................................19
5.0 Conclusion...............................................................................................................................20

3PROFESSIONAL PROJECT
References......................................................................................................................................22
Appendix........................................................................................................................................25
Appendix 1.................................................................................................................................25
Appendix 2.................................................................................................................................33

4PROFESSIONAL PROJECT
Topic: Impact of inflation rate on gross revenue of companies in Australia
1.0 Introduction
The purpose of this report is to evaluate the impact of inflation rate on the gross revenue
of the companies Australia. The performance of an economy is dependent of different factors
such as national reserve, output, per capita income, investment, exchange rate, interest rate and
price stability. Price stability or in other terms inflation rate is among top priorities for both
developed and developing nations. The knowledge gained in this study are essential for
understanding the market economies in developed countries like Australia. Price stability has a
profound impact of the operations of the companies as it increases the cost of raw materials and
other necessary costs.
1.1 Background of the study
The theoretical aspect of the relationship between Gross Domestic product and inflation
rate is negative where the increase in inflation rate means that there will be decrease in the
consumption. In theoretical terms, GDP= Consumption + Investment + Government
Expenditure + Net Exports (Exports – Imports) where if there is increase in inflation rate, price
stability decreases due to the increase in the prices of the consumer goods (Gay, 2016). This
means that there will be significant decrease in the consumption due to the increase in the prices.
This means that the gross revenue of the companies in Australia will be highly affected due to
the decrease in consumption of the goods. This implies that a higher GDP signifies higher
revenue generation from the companies in Australia as they directly contribute to the GDP.
In practical scenarios and economies experience high inflation rate when there is growth
or increase in the Gross Domestic product. Australia has a steady low inflation rate in the past

5PROFESSIONAL PROJECT
decade and the economist are concerned about the low inflation rate. The increase in growth of
an economy increases the consumption rate of the population which increases the inflation rate.
This means that with increase in the cost of the living, there is significant increase in the gross
domestic product in countries like Australia (Hutchens, 2018). This is the reason for the low
inflation for a country like Australia but this is contradictory to the theoretical approach as gross
revenue and GDP are expected to reduce due to the increase in inflation. Similarly, if the
inflation rate is low, is it expected that the GDP and Gross revenue of the companies will
increase (Letts, 2018). The study will examine these factors to identify the relationship between
inflation rate and gross revenue of different organizations in Australia.
1.2 Research Aim
The aim of the study is to evaluate the relationship between Gross revenue generated by
companies and inflation rate by taking Australia as an example where empirical analysis has
been conducted. The objectives of the study are as follows:
 To investigate the impact of inflation rate on Gross revenue generation of different
companies in Australia
 To investigate the implications of inflation in Australia
 To provide recommendations based on the implications
1.3 Research Questions
Primary Question: What is the relationship between inflation rate and Gross revenue generation
in Australia?
Secondary Question: What is the implications of low inflation rate in Australia?

6PROFESSIONAL PROJECT
1.4 Research Hypothesis
H0: There is negative between inflation rate and gross revenue generation for the companies in
Australia
H1: There is positive relationship between inflation rate and gross revenue generation for the
companies in Australia
2.0 Literature Review
2.1 Concept of Inflation Rate and Gross Revenue
Akhmetshin and Osadchy, (2015) revealed that inflation can be explained as a
considerable increase in the price level of goods and services within an economy over a specific
time period. A major measure of the price inflation is observed to be the inflation rate, the yearly
percentage change within the general price index that is basically the customer price index.
Egger and Wamser, (2015) added that with increasing inflation rates it is observed that inflation
is increasing with time because of which the spending within the economic needs requires being
tempered in order to offer stability that is highly beneficial to companies in making profits. It has
been observed that with increasing prices of commodities, food and energy along with several
other services and goods the overall economy is observed to be impacted. Hebous and Ruf,
(2017) also elaborated that controlled inflation can serve as a healthy sign for the overall
economy as larger organizations are generally positioned better in dealing with adverse impacts
of inflation as it can be addressed by savings gathered from economies of scale. Moreover,
researchers namely, Hoffmann and Schnabl, (2016) that revenue serves as the form of income
which is attained by companies through sale of its services or goods. Moreover, gross revenue is
also explained as the revenue that is attained by companies through subtracting expenses
associated with attaining revenue like wages, overhead, production costs, taxes and commission.

7PROFESSIONAL PROJECT
According to Tanzi, (2014) indicated that almost all companies prefer inflation rate to be
stable or decreased. For instance, in case inflation increases by 3% to 4% companies might
observe an increase in expenses along with certain related uncertainty. These researchers also
elaborated that inflation can also impact the gross revenue of the companies drastically through
resulting in issues such as decreasing limitability, increasing costs along with decrease in
international competitiveness. Egger and Wamser, (2015) also indicated that inflation is not
necessarily damaging for the organizations particularly they might increase prices to the
customers more than the related production increase costs. Certain effective viewpoints have also
been offered by these researchers through elaborating that inflation results in decrease in the
purchasing power of currency because of increase in prices all through the economy is also
deemed to affect business profitability. Akhmetshin and Osadchy, (2015) also revealed that in
Australia the inflation rate is observed to be high and it further increased to 2.1% year after year
in the second quarter of the 2018 which indicates that the general level of goods and services
prices are increasing. Along with that, the currency purchasing power is also observed to be
falling within Australian retail companies that can drastically affect their gross revenue position.
Gross revenue is deemed important for organizations as it can facilitate in analyzing the sales
and business as it indicates whether the organization has lost or made money after selling its
goods and services. This therefore serves as an important aspect in analyzing whether an
organization is succeeding in the industry through making profit.
2.2 Impact of inflation rate on gross revenue
Haider, (2018) states that inflation rate has both positive and negative impacts for not
only consumers and businesses. Firms and organizations want the inflation rate to be as low as
possible as high inflation rate increases the cost and poses uncertainty for the companies. It will