eceived.
Product managers expressed concern over the percentage rate for the capital charge, and some were concerned that they would have to raise prices on their products that would put them out of competition with other products in the market. Those product managers who had been showing a trading profit to this point were particularly concerned when their products began showing an economic loss. The resistance and confusion was causing a great deal of trouble for Thomas J. Lipton, and new strategies needed to be implemented.
The goal of accounting for inflation, which is the overriding goal behind the change in accounting structure, is an admirable one. If inflation is not taken into account, it is possible for a company to post nominal increases in sales that do not reflect actual increases in market share. If a company is not careful with regard to these issues, it can find itself facing a long-term perplexing loss although its income statement shows an increase in trading profit.
However, American companies do not typically report information ba
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