How do you deflate sales numbers to reflect real values?

To deflate sales numbers to reflect real values, it is crucial to adjust for inflation, allowing for a comparison of purchasing power across different time periods. The correct method involves multiplying the actual revenue by the ratio of the Retail Price Index (RPI) of the first year to the RPI of the current year. This calculation essentially adjusts the nominal revenue figure to account for inflation, thus providing a clearer picture of real sales values.

Utilizing the RPI from both the first year and the current year helps in standardizing sales figures, ensuring they are consistent with a base year, which is vital for accurate analysis and planning. The multiplication approach effectively lowers the sales figures in accordance with inflation, presenting them in today's terms and allowing stakeholders to make informed decisions based on the real economic scenario.

In contrast, other methods presented do not correctly adjust the sales figures for inflation or misrepresent the calculation needed to achieve real values. For example, simply dividing or subtracting the indices does not yield the necessary adjustment factor required to properly reflect changes in purchasing power over time. Thus, the multiplication method stands out as the appropriate choice for this purpose.