CFOs remain optimistic about financial performance despite escalating geopolitical tensions
Dun & Bradstreet India’s Composite CFO Optimism Index increased by 9.1% on a q-o-q basis during Q4 2023.
A recent survey of Chief Financial Officers (CFOs) in India, conducted by Dun & Bradstreet India, a leading global provider of business decisioning data and analytics, found that CFOs’ confidence in financial conditions and macro-economic conditions has improved significantly compared to same period last year.
The Dun & Bradstreet India Composite CFO Optimism Index analyses the optimism level of CFOs on 12 parameters: operating margin, liquidity position, level of financial risk on company’s balance sheet, risk appetite, need for raising short-term and long-term funds, cost of raising funds, availability of funds, domestic and global macroeconomic scenario, overall scenario for mergers and acquisitions, and level of financial risks for businesses.
Key findings from the survey:
- The Composite CFO Optimism Index stands at 103.7, 9.1 percentage points higher on a q-o-q
- Overall optimism for financial performance stands at 99.0 in Q4 2023, highest in 8 quarters.
- Optimism for overall macroeconomic scenario decreased for the industrial sector by 6 percentage points (q-o-q).
- Optimism for the global macro-economic scenario has diminished, with 33% of respondents expecting it to decrease in Q4 2023, compared to 37% in Q3
- 52% of CFOs are optimistic about the requirement for short term funds in Q4 2023, highest since the inception of index in
- 52% of CFOs are optimistic about the availability of funds in the market in Q4 2023, which is highest in 11
- 42% of CFOs in the industrial sector expect the operating margin of the company to decrease in Q4 2023, 9 percentage points lower than Q3
Commenting on the findings of the survey, Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet said, “Despite escalating geopolitical tensions stemming from the Israel-Hamas conflict and the existing global financial strain from high interest rates and increased risk, domestic CFOs’ confidence remains steadfast. CFOs exhibit heightened optimism compared to the previous quarter, forecasting enhanced business activity and a positive financial outlook for companies. Businesses are swiftly adapting to the high interest rates, fostering hope for an early end to monetary tightening and a surge in consumer demand. This shift drives the need for increased working capital and credit for capital expenditures.
Nonetheless, there’s an anticipation of amplified financial risks linked to balance sheet volatility due to turbulence in global capital markets. Specifically, the industrial sector faces challenges with expected rising costs impacting operating margins, likely to remain subdued.”
About the Dun & Bradstreet India Composite CFO Optimism Index
The Dun & Bradstreet India Composite CFO Optimism Index, which has been tracking the changing sentiment of CFOs since 2012, is a leading indicator of the Indian financial market as it helps in predicting the performance of the Sensex three months in advance.
A sample of companies belonging to basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and the services sector is selected randomly from Dun & Bradstreet’s commercial credit information file. The sample selected is representative of India’s business community. All the respondents in the survey are asked a set of questions regarding the financial performance of their companies and the overall macroeconomic scenario for the corporate sector in the forthcoming quarter. The CFOs are asked to state their expectations as to whether the specified parameters pertaining to their respective companies and the overall macroeconomic scenario will register an increase, decrease, or show no change in the ensuing quarter as compared to the same quarter in the previous year. Two broad indices, optimism at the company level and optimism at the macroeconomic level, each consisting of eight and four sub-parameters respectively, are then designed.
About Dun & Bradstreet:
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