Dun & Bradstreet Composite CFO Optimism Index Goes Down

Dun & Bradstreet, the world’s leading provider of global business information, knowledge and insight conducted a pan India survey of Corporate CFOs in which they were asked about their confidence in the overall financial and macro-economic conditions for Q22015 (Apr-Jun of the calendar year 2015), as compared to the same quarter of the previous year. The survey reveals how optimistic the CFOs are with respect to the overall financial health of their respective companies, the business risk environment and; the macroeconomic scenario in the country.

The survey revealed interesting facts about CFOs’ perspective on the overall Business Climate:

Dun & Bradstreet Composite CFO Optimism Index registered a decline for the third consecutive quarter during Q2 2015, but remained high on a y-o-y basis.

• While the optimism level of both the services and industrial sector moderated during Q2 2015, the optimism level of the services sector moderated strongly than the industrial sector.
• While the survey reveals that 63% of CFOs are optimistic regarding the operating margin of the company and 56% of CFOs are optimistic regarding liquidity position of the company, only 21% of CFOs expect the level of financial risks on the company’s balance sheet to decrease.
• Although 56% of the CFOs remain optimistic regarding the liquidity position of the company, the optimism level with regards to the liquidity position declined for two successive quarters.
• Majority of CFOs expect level of financial risks on the company’s balance sheet (55%) and risk appetite (58%) to remain unchanged during Q2 2015 as compared to same period last year.
• Although, only 40% of the CFOs revealed an increase in need for raising long term funds, the percentage of CFOs indicating an increase in need has been steadily growing since Q3 2014.
• While CFOs remain optimistic regarding both the domestic (75%) and global (52%) macroeconomic scenario, the optimism regarding the domestic economic scenario during Q2 2015 remains dented as compared to last three quarters.
• Also, optimism for overall scenario for Mergers and Acquisitions stands lowest since Q3 2014. 

Commenting on the findings of the survey, Arvind Raghav, Director - Risk Management Solution, Dun & Bradstreet India said optimism level among the CFOs has failed to revive for the third consecutive quarter as optimism pertaining to the domestic macroeconomic scenario remains dented. Slower pace of reforms than initially expected, weak profit level of the corporates, non-revival in the demand conditions, policy logjam in upper house coupled with a tepid global recovery have led to the weak sentiment among the CFOs. Nonetheless, even as the optimism level remains subdued on a q-o-q basis, it stands elevated on a y-o-y basis. The economic indicators during the current period such as the inflation rate, interest rates, current account deficit and exchange rate are more benign as compared to the year ago period.