Effect of inflation accounting on financial ratios: Evidence from publicly traded companies in Türkiye

This study aims to investigate the impact of inflation and inflation accounting on financial ratios. Particularly, the supply shortages and consequent price increases following the Covid-19 pandemic have triggered inflation upward worldwide. With inflationary effects, measuring and evaluating companies' financial performance has become both difficult and complex. Therefore, in this study, one of the most valuable methods for measuring company performance, basic financial ratio analysis, was examined before and after the application of inflation accounting, and the changes were compared with other studies in the literature. The scope of the study includes non-financial companies listed on Istanbul Stock Exchange as of December 31, 2022. The financial statements of these companies as of December 31, 2022, were analyzed by dividing them into various sectors before and after the application of inflation accounting. Various statistical methods were utilized in this analysis. According to the study results, there were significantly different outcomes in some key ratios before and after the application of inflation accounting. This proves the importance of inflation accounting when measuring company performance during inflationary periods. Financial evaluations made without applying inflation accounting can be misleading.