The effect of inflation on activity ratios: Evidence from Borsa İstanbul

Year 2025, Volume: 54 Issue: 2, 292 - 308, 26.08.2025

Ensar Ağırman , Osman Can Barakalı , Fatih Coşkun Ertaş

https://doi.org/10.26650/ibr.2025.54.1268797

Abstract

The financial ratios of enterprises are affected by both micro and macro factors. Macroeconomic changes in the current economy affect the financial performance of the firms. Inflation is one of the most crucial variables in any economy today. The financial ratios calculated and projected by the enterprise in the ordinary course of activity are eroded by the effect of inflation. In order to give these ratios their lost significance, managers need to know the extent of the erosion created by inflation in financial ratios. In this study, it was investigated how inflation ratios affect the activity rates of enterprises. Thus, it provides managers with foresight about how inflation may affect activity ratios. In the study, the data of the companies included in the Borsa Istanbul Trade Index (XTCRT) between 2011 and 2021 were examined by panel data analysis. The findings reveal that the inflation ratio has a significant negative effect on the receivables turnover and debt turnover ratios in the long run.

Keywords

Activity ratio , Inflation , Financial management

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