According to a CFO survey, optimism for financial performance increased to 99 in Q4 of 2023, a two-year high
- IBEF
- November 24, 2023
In Q4 2023, the composite Chief Financial Officers (CFOs) index for India rose to 103.7, a 9.1 percentage points rise on a quarter-on-quarter (q-o-q) basis. A recent survey by a global provider of business decisioning data and analytics ‘Dun & Bradstreet India’ of Indian CFOs indicates that overall optimism for financial performance is at 99.0 in Q4 of 2023, the highest level in eight quarters and reaching the two-year high.
According to the CFO survey, compared to the same time last year, CFOs' confidence in the macroeconomic and financial conditions has increased dramatically. For the industrial sector, the level of optimism over the overall macroeconomic scenario decreased by six percentage points (q-o-q).
As per the survey, respondents' optimism for the global macroeconomic situation has decreased; in Q4 2023, 33% of respondents expected it to decline, down from 37% in Q3 2023. The greatest percentage of CFO optimism since the index's launch in 2012, 52% of CFOs anticipate that short-term cash requirements would peak in Q4 2023.
According to Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet, “CFOs exhibit heightened optimism compared to the previous quarter, forecasting enhanced business activity and a positive financial outlook for companies.''
Additionally, the survey also found that 52% of CFOs are confident that there will be funds available in the market in Q4 2023, which is the greatest percentage in 11 quarters. Additionally, 42% of CFOs in the industrial sector anticipate a 9 percentage point decline in the company's operating margin in Q4 2023 compared to Q3 2023.
The optimism level of CFOs is analysed by the Dun & Bradstreet India Composite CFO Optimism Index based on 12 parameters, which are as follows:
1. Operating margins
2. Liquidity position
3. Level of financial risk on the company’s balance sheet
4. Risk appetite
5. Need for raising short-term and long-term funds
6. Cost of raising funds, availability of funds
7. Domestic and global macroeconomic scenario
8. Overall scenario for mergers and acquisitions
9. Level of financial risks for businesses.
As a leading indicator of the Indian financial market, the Dun & Bradstreet India Composite CFO Optimism Index helps forecast the performance of the Sensex three months ahead of time by monitoring the shifting sentiment of CFOs since 2012.
From Dun & Bradstreet's commercial credit information file, a random sample of businesses in the basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables, and services sectors is chosen. The chosen sample is representative of the business community in India.
As part of the survey, CFOs are asked to indicate whether they anticipate an increase, decrease, or no change in the upcoming quarter compared to the same quarter the previous year for the specified parameters related to their individual companies and the overall macroeconomic scenario.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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