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Feb 02

CFOs more upbeat these days

Posted by Stephen Taub in RiskFinancial Executives InternationalCFOsCFOCashCareers/ManagementBaruch College's Zicklin School of Business

Stephen Taub

Chief Financial Officers are more optimistic than they were three months ago.

According to the latest survey of CFOs conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business, an index measuring CFO optimism for the US economy rose more than 10 points and the outlook for CFOs' own companies' also increased nearly four points.

The overall level of confidence in their companies' prospects for financial success was also great than their European counterparts by more than seven points.

In addition, nearly two-thirds (64 percent) of US CFOs said they plan to hire additional employees within the next six months, an increase from October when 56 percent of US respondents stated the same.  

Their European counterparts were mostly split when it came to hiring strategies. Less than half (46 percent) plan to hire, and a similar percentage (43 percent) stated they do not plan to hire.

The widely followed quarterly "CFO Outlook Survey" polls CFOs of public and private businesses of various sizes on their economic and business confidence, and timely issues impacting their companies.  For the first time in the survey's history, CFOs in Italy and France were also polled this quarter for a comparison of trends between the US and Europe.

CFOs on both sides of the pond indicated a growing optimism based on other measures.

For example, CFOs in both Europe and the US expect continued significant growth in both revenue and net earnings in the next 12 months. The survey points out that since they are expecting modest growth in their product prices (2-3 percent) the majority of the growth is in unit volumes and new products.

In the US, revenue is expected to grow at 10.5 percent while earnings growth is expected to surge by 16.6 percent, suggesting continued strong gains in efficiency and cost controls over and above volume growth. 

In Europe, expected revenue growth of 13.1 percent is higher than net earnings growth (9.5 percent), suggesting that CFOs have less available capacity and face more pricing pressure on inputs.  

In addition, slightly more than half of CFOs anticipate no change in their access to credit over the next six months.

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