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Thread: Definition of deflated

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    Cool Definition of deflated




    Hello guys


    Do you know what do they mean by "deflated" in the following sentence?


    "firms reported goodwill impairment loss ( expressed as a positive number) deflated by the total assets at the ned of t-1 year."


    Thank you in advance!

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    Re: Definition of deflated

    Normally deflation is the opposite of inflation hence som use the term to "deflate with the price index" when they adjust for the inflation in order to get real values.
    This is normally done by dividing by 1 + inflation rate. Hence my guess is that they simply mean that the numbers are divided by total assets at the end of year t-1. They are probably doing so because bigger firms with larger assets also have higher goodwill value and hence suffer higher loss (because the loss is probably a percentage) so one could argue that it makes more sense to think in relative terms.

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    Re: Definition of deflated

    I thought they mean "divided", because it makes sence. i will use goodwill deflated by total assets as dependant variable. but why they do not say divided i do not understand...

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    Re: Definition of deflated



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