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Signs of Spring

Finance executives have turned their attention to the problem of sustaining real growth.
Julia Homer, CFO Magazine
March 1, 2004

There will be growth in the spring. That, anyway, is the consensus of CFOs (see our "Global Confidence Survey"), with readers around the globe reporting cautious optimism about the economy.

Translating that optimism into growth at individual companies will be something else again. Research shows that only a small percentage of mergers and acquisitions, the most common route to growth, actually add value to the acquiring company. Indeed, unless buoyed by a roaring economy or affiliated with a high-octane industry, most mature companies struggle to expand beyond fairly narrow boundaries.

After watching the spectacular collapses of dozens of behemoth corporations and the depressing, if less dramatic, shrinkage of many smaller ones, attention has turned to the problem of sustaining real growth.

Not surprisingly, management consultants have jumped into the fray, with several theories on how to do so. Our cover story, "Going for Growth," by news editor Joseph McCafferty, features four companies that illustrate some of these ideas, branching out beyond their core businesses with varying degrees of success.

More predictable than growth in the spring is the cleanup of numbers at year-end. In "Scrubbing the Numbers," senior writer Tim Reason reports on the curious phenomenon of companies making their fourth-quarter working-capital numbers look as good as possible for the annual report, only to erase any gains in the next quarter. Illegal? No, but potentially misleading, and, as anyone who works in finance will tell you, a terrific waste of time.




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