Real Profit
What the profit in the books is really worth after customers' payment delays, inflation and the pound's exchange rate, on the 12 months to Sep 2026.
What this means
Automatic, from the figuresReported profit of EGP 1,237,465 is worth EGP 940,689 at today's prices (76% of what the books show), after 20.0% inflation. The largest erosion is cash held (EGP 206,520). Owners earned a real return of 79.3% a year on their equity.
Your assumptions
Example figures for the demo. Enter your own.1. Cash collection: profit you have not received yet
Profit is booked when you invoice; it is only yours to spend when the customer pays.
| Sales invoiced | EGP 12,388,806 |
| Increase in what customers owe | -EGP 24,952 |
| Cash collected from sales | EGP 12,363,854 |
| Collection rate | 99.8% |
| Customer days (DSO) | 15 days |
Customers take 15 days to pay on average, so about EGP 575,244 of your money is held by them at any time.
At your borrowing rate of 24%, financing that credit costs about EGP 138,058 over the period, and every extra day customers take costs about EGP 8,146 a year.
2. Inflation: from reported to real profit
Accounts are kept in pounds of different dates. These adjustments restate the year in today's pounds, so profit means real gain in purchasing power. Hover the ⓘ for the working.
- Customers paying later: -EGP 115,049. Customers owed EGP 575,244 on average (15 days of sales). Prices rose 20.0% over the period, so that money buys less when it arrives.
- Cash held: -EGP 206,520. Average cash and bank balances of EGP 1,032,601 lost 20.0% of their purchasing power (less any interest earned, already in profit).
- Borrowing repaid in cheaper pounds: EGP 44,864. Average borrowing of EGP 224,322 is repaid in money worth 20.0% less. The interest in profit is the price of this gain.
- Suppliers, taxes and other amounts owed: EGP 72,531. Average amounts owed to suppliers and others of EGP 362,654 are also settled in cheaper money.
- Replacing the stock sold: -EGP 48,922. Stock is held about 25 days. Goods sold were bought at older prices; replacing them costs 0.7% more (40% imported, priced with the exchange rate). That part of gross profit must be reinvested just to keep the same stock.
- Depreciation at today's prices: -EGP 43,680. Assets about 3 years old cost 72.8% more to replace today, so true depreciation is higher than the books show.
3. Devaluation: the result in hard currency
For owners and lenders who think in dollars. Exchange gains and losses on foreign-currency balances are already in reported profit when the books revalue them at the period end (EAS 13).
| Change in the USD rate over the period (EGP per USD) | -1% |
| Change in the pound's value in dollars | 1% |
| Reported profit in USD (average rate) | USD 25,384 |
| Real profit in USD | USD 19,296 |
| Owners' equity in USD at the start | USD 21,932 |
| Owners' equity in USD at the end | USD 47,327 |
| Change in owners' wealth in USD | USD 25,394 |
How this is calculated
Money held or owed (cash, receivables, borrowing, suppliers, taxes) gains or loses purchasing power: average balance × inflation over the period. Average balances use every month-end held in the period.
Stock sold was bought earlier at lower prices. Replacing it costs cost of sales × the price rise over the stock days; imported stock rises with the dollar, local stock with inflation.
Depreciation is on what the assets cost when bought; at today's prices it is higher by the inflation since then.
Prepayments and other current assets are left out. This is a current-cost view in the spirit of IAS 29 (financial reporting in high inflation): it adjusts for the main effects of rising prices but does not restate every line to period-end money. It is meant for management decisions, not statutory accounts.
Return on equity after inflation is the owners' real gain in purchasing power: (1 + return on equity) ÷ (1 + inflation) − 1. It looks at equity as a whole, so it can differ from the profit bridge above.