What Manufacturing Chief Financial Officers Have to Say

On March 22 Thorugh April 5, 2010, Grant Thornton LLP Conducted a Survey Among Chief Financial Officers. 496 U.S. CFOs and Senior Comptrollers were Surveyed. Among this Large Group, 92 Officers were from Manufacturing Companies. See What These Manufacturing Chief Financial Officers Had to Say

By Grant Thornton LLP

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See what questions were presented to 92 manufacturing chief financial officers and how they responded.

1. Your company is:

Item Count     Percent % 
Public 49  53.26%
Private  43 46.74%

 

2. The revenue size of your company is:

Item Count     Percent %
Between $1 billion to $5 billion 28 30.77%
Between $100 million and $500 million 25 27.47%
Greater than $5 billion 20 21.98%
Between $500 million and $1 billion 13 14.29%
Less than $100 million 5 5.49%

 

3. The state in which you are headquartered:

Item Count   Percent %     Item Count Percent %
Michigan  9  9.89%     Kansas  2  2.20%
New Jersey  8  8.79%     Maryland  2  2.20%
California  7  7.69%     Massachusetts  2  2.20%
Texas  7  7.69%     Minnesota  2  2.20%
Ohio  6  6.59%     Missouri  2  2.20%
Florida  5  5.49%     Wisconsin  2  2.20%
North Carolina  5  5.49%     Arizona  1  1.10%
Georgia  4  4.40%     Idaho  1  1.10%
Indiana  4  4.40%     Kentucky  1  1.10%
Illinois  3  3.30%     Nebraska  1  1.10%
New York  3  3.30%     Rhode Island  1  1.10%
Oregon  3  3.30%     South Carolina  1  1.10%
Pennsylvania  3  3.30%     Tennessee  1  1.10%
Connecticut  2  2.20%     Washington  1  1.10%
Iowa  2   2.20%          

 

4. Over the next six months, do you expect the U.S. economy to:

Item Count Percent %
Improve 43 46.74%
Remain the same 43 46.74%
Worsen 6 6.52%

 

5. Over the next six months, do you expect your company’s financial prospects to:

Item Count Percent %
Improve 55 59.78%
Remain the same 33 35.87%
Worsen 4 4.35%

 

6. Over the next six months, do you expect prices or fees charged by your company to:

Item Count Percent %
Improve 54 59.34%
Remain the same 31 34.07%
Worsen 6 6.59%

 

7. Over the next six months, do you expect your headcount to:

Item Count Percent %
Improve 46 50.00%
Remain the same 23 25.00%
Worsen 23 25.00%

 

8. When do you believe the U.S. economy will come out of recession?

Item Count Percent %
2011 46 50.00%
Second half of 2010 24 26.09%
Later than 2011 17 18.48%
First half of 2010 5 5.43%

 

9. The best way to create jobs is:

Item Count Percent %
Cut corporate tax rate 34 40.00%
Cut personal income tax rates 26 30.59%
Tax credit for new hires 14 16.47%
Government stimulus programs 8 9.41%
R&D credits 3 3.53%

 

10. Is your company reducing average costs per employee in any of these employee benefit and compensation areas?

Item Decrease Same Increase Total
Salary raises 27.2%
25
55.4%
51
17.4%
16
92
Bonuses 38.0%
35
50.0%
46
12.0%
11
92
Stock options/equity based compensation 32.6%
28
66.3%
57
1.2%
1
86
401 (k) match 22.8%
21
73.9%
68
3.3%
3
92
Health care benefits 26.4%
24
68.1%
62
5.5%
5
91
Life insurance benefits 7.7%
7
90.1%
82
2.2%
2
91
Disability benefits 7.7%
7
91.2%
83
1.1%
1
91
Average % 23.1% 70.7% 6.1% 635.0

 

11. About which type(s) of pricing pressure are you most concerned? (You may select more than one.)

Item Count     Percent %
Raw materials (e.g., food, metals) 62 70.45%
Employee benefits (e.g., health care, pensions) 49 55.68%
Energy 28 31.82%
Insurance 9 10.23%
Other 4 4.55%

 

12. Are you having difficulties accessing credit in general?

Item Count Percent %
No 71 80.68%
Yes 17 19.32%

 

13. Compared to this time last year are you more or less worried about your organization.

Item Count Percent %
Less Worried 49 55.68%
About the same 33 37.50%
More worried 6 6.82%

 

14. The FASB and IASB will be shortly releasing an exposure draft regarding revenue recognition. The objective is to clarify the principles for recognizing revenue and to create a joint revenue recognition standard for US GAAP and IFRSs that companies can apply consistently across various industries and transactions. Are you aware of this project?

Item Count Percent %
No 60 68.18%
Yes 28 31.82%

 

15. Do you believe financial statements are too complex to be useable by the average investor?

Item Count Percent %
No 52 60.47%
Yes 34 39.53%

 

16. Does your company currently provide nonfinancial measures (Key Performance Indicators) about your organization in its financial statements?

Item Count Percent %
No 42 50.60%
Yes 41 49.40%

 

17. Who do you view as the primary users of your financial statements?

Item Count Percent %
Current shareholders 28 33.73%
Creditors 16 19.28%
Management 13 15.66%
Current owners of equity interests 6 7.23%
Potential shareholders 5 6.02%
Regulatory agencies 5 6.02%
Research (sell side) analysts 5 6.02%
Rating agencies 3 3.61%
Other 1 1.20%
Potential owners of equity interests 1 1.20%

 

18. Does your firm prepare financial statements according to International Financial Reporting Standards (IFRS)?

Item Count Percent %
No 63 75.90%
Yes 20 24.10%

 

19. Do you support a move to IFRS?

Item Count Percent %
Yes 44 53.01%
No, would like to continue using GAAP 39 46.99%

 

20. Ideally, who should set U.S. accounting standards for companies that file with the SEC?

Item Count Percent %
A national independent board supervised by a national regulator (e.g. the Financial Accounting Standards Board) 44 56.41%
An international independent board supervised by international entities such as the International Organization of Securities Regulators (e.g. the International Accounting Standards Board) 22 28.21%
A national regulator (e.g the Securities and Exchange Commission) 9 11.54%
The global accounting profession (e.g. the International Federation of Accountants) 2 2.56%
A body designated by an international entity such as the Organization for Economic Cooperation and Development, the United Nations Council on Trade and Development or the World Trade Organization 1 1.28%

 

21. During 2010 and 2011, the FASB and the IASB plan to issue standards that will include major revisions to the current accounting for revenue recognition, financial instruments, leases, financial statement presentation, insurance contracts, and the conceptual framework. How should these standards be implemented in the US?

Item Count Percent %
Using an incremental approach where no more than one major standard takes effect in a given reporting year to allow time for preparers and users to understand and implement the changes. 28 35.90%
The standards should be implemented first in IFRS; US companies can make the transition on adoption of IFRS 20 25.64%
The Boards are moving too quickly to implement major changes and should defer major changes in the financial reporting model until the projects have been more fully developed and discussed. 16 20.51%
Using a "big bang" approach where all of the standards are effective for the same reporting period to improve the financial reporting model as quickly as possible. 14 17.95%

 

22. Should there be different recognition and measurements principles for public entities and nonpublic entities?

Item Count Percent %
No 44 58.97%
Yes 22 28.21%
Don't know 10  12.82%

 

23. Should nonpublic entities be allowed to use simpler recognition and measurement principles when preparing financial statements?

Item Count Percent %
No 37 47.44%
Yes 35 44.87%
Don't know 6  7.69%

 

24. In the coming year, do you believe your aggregate state effective tax rate will:

Item Count Percent %
Increase 47 61.84%
Remain the same 26 28.95%
Don't know/not applicable 2  7.89%
Decrease 1 1.32%

 

25. With regard to international taxation, you are most concerned about:

Item Count Percent %
Transfer pricing 27 35.53%
Overall global compliance burden 19 25.00%
Repatriation of offshore earnings 18 23.68%
Risk management in developing countries 10 13.16%
Mergers and acquisitions 2 2.63%

 

26. Is your company currently taking any actions in anticipation that federal tax rates will change?

Item Count Percent %
No 53 70.67%
Yes 22 29.33%

 

27. What types of actions? (Check all that apply)

Item Count Percent %
Reorganization of business structure 20 51.28%
Acquisition of capital assets 9 23.08%
Acceleration of dividend payments 8 20.51%
Other (please use text box below to describe) 8 20.51%
Disposition of capital assets 7 17.95%
Modification of terms on installment sale(s) 4 10.26%

 

28. Does your company plan on taking any action in anticipation of the current administration's international tax proposals?

Item Count Percent %
No 50 67.57%
Yes 24 32.43%

 

29. What types of decisions or actions? (Check all that apply)

Item Count Percent %
Foreign tax credit planning 15 37.50%
Cash repatriation 14 35.00%
International reorganization 12 30.00%
International supply chain changes 12 30.00%
Other (please use text box below to describe) 9 22.50%

 

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