How to adjust foreign currency for inflation?

Question:

If I wanted to compare the net income of an international company back then to now how should I make the conversion. Should I convert the local currency to USD then adjust inflation to the USD inflation, or adjust the local currency first then convert to USD. Wanted to see how if a company net income increase significantly over the years. Its Japanese yen to USD so unfortunately the discrepancy is significant.

Answer:

The conversion should be based on where the company’s profits are to be rebated. If the shareowners are US entities, the real value through dollar adjustment is what matters. On the other hand, if it is a Japanese company held with local entities, its real yen value is what matters for the shareholders.