D&B Composite CFO Optimism Index
D&B CFO Composite Optimism Index is the result consolidated on the basis of a survey conducted among Chief Financial Officers (CFO) by Dun & Bradstreet. The D&B CFO Composite Optimism Index represents the expectations and feedbacks of CFOs in India regarding the financial state of their own company and overall macroeconomic conditions. The survey is conducted on a quarterly basis. The D&B CFO Composite Optimism Index is a useful tool for banks, financial institutions, financial managers and economists to understand the overall expectation of the economic performance which can be employed in day-to-day decision making.
Dun & Bradstreet Corporation
The Dun& Bradstreet Corporation has its headquarters in Short Hills, New Jersey, USA. The company which is normally termed D&B has presence across the globe. D&B provides commercial data, analytics, and insights for businesses along with a wide range of products and services for finance, marketing and research professionals.
What is the methodology used for D&B CFO Composite Optimism Index survey?
The sample size of companies for the survey is picked randomly by Dun & Bradstreet from their commercial credit information file. Thus the companies represent a random mix of players in the fields of basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and the services sector. In effect, the mix of companies is a representation of the microcosmic of Indian business community.
The CFOs of the companies are then asked to respond to a set of questions on the financial performance of their companies. They are also required to reveal their expectations on the overall macroeconomic scenario for the corporate sector in the forthcoming period. The CFOs provide their outlook as to whether the specified parameters affecting their respective companies and the overall macroeconomic scenario will register an increase, decrease or maintain same level in the ensuing quarter as compared to the same quarter in the previous year.
Based on the feedback from the respondent CFOs, two broad indices are created. These indices represent optimism at the company level and optimism at the macroeconomic level. The company level optimism index consists of 8 parameters and the macroeconomic level optimism index consists of 4 parameters.
What is D & B Composite CFO Optimism Index?
The feedbacks from the CFOs are collated to create the two broad indices, company level optimism index and macroeconomic level optimism index. Dun & Bradstreet introduced a Composite CFO Optimism Index for the purpose of capturing the aggregate behavior of the two indices. The D&B Composite CFO Optimism Index was introduced in Q3 2013.
How is the level of D&B Composite CFO Optimism Index arrived?
Each of the 12 parameters assessed to arrive at company level optimism index (8 parameters) and macroeconomic level optimism index (4 parameters) carries a weight assigned to the parameter. The positive feedbacks for each of these parameters for the period under review are expressed as a proportion of positive responses in the base period (Q2 2012). The parameter weight assigned to each parameter is then applied to these ratios and the results are aggregated to find out the D&B Composite CFO Optimism Index.
For the purpose of the D&B survey, Q1 represents the period January to March, Q2 represents April to June, Q3 represents to July to September and Q4 represents the period between October and December each year.
