Organic Sales Growth Simple Formula

CFA Level II
#1

It seems there are 2 formulas according to CFAI Textbooks. Which one is correct?

Net Sales Growth + Foreign Exchange Impact = Organic Sales Growth

Net Sales Growth - Foreign Exchange Impact = Organic Sales Growth

Im leaning toward the second one because you are actually “removing” the effect.

CFAI offers contradicting calculations in Exhibit 6 and Example 11 (pg 279) unless I’m not understanding correctly.

#2

I have this same confusion. Can somebody shed some light on this?

#3

I think you should simply average the two:

Organic sales growth = [(Net sales growth + foreign exchange impact)

  • (Net sales growth – foreign exchange impact)] ÷ 2

= Net sales growth

(In the alternative, you could check CFA Institute’s website to see if there were an erratum posted for one of these formulae.)