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Economic, political fronts spook CFOs, even if hiring, credit prospects don't

Ed Zwirn | Dec. 14, 2011
In the latest survey to show promising signs for business operations, the Bank of America Merrill Lynch CFO Outlook survey suggests that most CFOs are confident they won't have to reduce workforces in 2012, and that credit will be available to companies.

No. 1 was the effectiveness of U.S. government leaders, listed as a concern by 70% of CFOs. In addition, 63% listed the U.S. budget deficit, 60% listed healthcare costs, 58% listed unemployment and 55% listed consumer confidence. Last year's top concern regarding the economy was healthcare reform, chosen by 54% of executives.

"Never in the history of the CFO Outlook have there been so many factors at a high level of concern," Whitley observed.

When asked about financial concerns specific to their own companies, 56% of CFOs chose healthcare costs. That was followed by energy costs and consumer confidence, both at 43%; cash flow at 42%; and revenue growth at 40%.

Among the survey's other findings:

  • Regarding revenues, 56% of CFOs expect growth, down from 64% last year.
  • Similarly, 41% of CFOs anticipate a growth in profit margin, down from 55% last year.
  • Only 18% of CFOs expect to participate in a merger or acquisition next year, down from 26% a year ago.

Despite economic uncertainties, there haven't been widespread cuts to research and development. More than three-fourths of CFOs said their R&D expenses were the same or higher than pre-recession levels, similar to last year's response.

Conducted by Granite Research Consulting, the CFO Outlook was compiled from phone interviews conducted from late September to early November. The margin of error is +/- 4%.


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