Question
Why can inflation compress projected margins even when revenue is rising?
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Answer
Costs may rise faster than selling prices.
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Question
Why does strong buyer bargaining power lead to lower gross margin assumptions?
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Answer
Buyers can force price concessions, compressing gross margins.
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Question
Why does inflation effectively reduce the real burden of nominal debt?
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Answer
Debt is repaid with cheaper dollars.
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Question
Why does FIFO inventory overstate profits during inflation?
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Answer
Older, cheaper costs flow to COGS, understating expense.
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