Financial Analysis under Inflation in Construction

by Abraham Warszawski, (M.ASCE), Head; Building Research Station, Technion, Israel Inst. of Tech., Haifa, Israel,
Yechiel Rosenfeld, Instr.; Dept. of Civ. Engrg., Technion, Israel Inst. of Tech., Haifa, Israel,

Serial Information: Journal of the Construction Division, 1982, Vol. 108, Issue 2, Pg. 341-354

Document Type: Journal Paper


The stated value of main items in the financial reports of a construction company does not reflect correctly under inflation their actual value. This introduces a considerable difficulty into the process of financial analysis. The paper presents a method for appropriate adjustment of the main financial reports - the Balance Sheet and the Income Statement, to eliminate the distorting effects of inflation. The procedure is illustrated by an example of application.

Subject Headings: Financial management | Construction management | Value engineering | Construction companies

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