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Six Ways to Reduce Days Sales Outstanding

CFO Magazine - 19 October 2017
Cash flow is the lifeblood of any business. And a key measure to track for a healthy cash flow is Days Sales Outstanding (DSO). DSO represents the number of days it takes for a company to convert its accounts receivable into cash. The sooner the company gets that cash, the stronger its cash flow and financial position is likely to be.
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Directors' Experience Doesn't Always Pay Off

CFO Magazine - 19 October 2017
It may seem obvious that shareholders stand to benefit when outside directors on a company’s board have experience in the industry the company operates in. However, a forthcoming research paper contends, that doesn’t hold true in the case of highly diversified companies, where directors tend to “play favorites” by influencing over-investment in the industries they’re most familiar with.
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Be Cautious About 'Sweating your Assets'

CFO Magazine - 16 October 2017
Although there are countless operating initiatives we can pursue to create value in business they all can be characterized in one of three ways. First, we can make investments that deliver a return over the life of the investment above the required return on capital. Second, we can improve the profitability of existing activities by some combination of price and cost management. Third, we can improve asset productivity and deliver more profit or cash flow per dollar of assets.
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Hurricanes to Cut $44M From Jet Blue Revenue

CFO Magazine - 11 October 2017
The recent string of hurricanes created some turbulence for JetBlue Airways, which said Wednesday that revenue and profit for the second half of the year would be hit by the weather. The airline said that on a preliminary basis, the hurricanes negatively impacted third-quarter revenue by about $44 million and operating income by $30 million to $35 million, or 6 to 7 cents per share.
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What Wildfires, Hurricanes Can Teach About Risk Reduction

CFO Magazine - 11 October 2017
The Northern California wildfires. Harvey. Irma. Maria. We shudder at the thought of the devastation these natural disasters have inflicted. And such high-cost disasters aren’t just happening in the United States. In Mexico, strong earthquakes have left hundreds of people dead. Across South Asia, more than 1,200 people were killed and millions more displaced in severe monsoons in August.
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Dell to Invest $1 Billion in 'Internet of Things'

CFO Magazine - 11 October 2017
After pivoting from personal computers to data center hardware and software, Dell Technologies is now charting a course toward the next state of its evolution — providing “distributed” computing through the Internet of Things. The company said Tuesday it will invest $1 billion in new IoT products, research and partnerships over the next three years and named Ray O’Farrell, the chief technology officer of its Vmware subsidiary, to lead a new IoT Solutions Division that will combine internally developed technologies with products from its partner ecosystem and investments.
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'Nudge' Theorist Wins Nobel Economics Prize

CFO Magazine - 9 October 2017
U.S. economist Richard Thaler, whose pioneering work has integrated economics with psychology and who popularized the concept of “behavioral economics” in the best-selling book “Nudge,” has been awarded the Nobel Prize for economics. According to the Nobel committee, the University of Chicago professor has expanded economic analysis by showing how three psychological traits — limited rationality, perceptions about fairness, and lack of self-control — influence economic decisions.
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Basel Committee Relaxes Bank Funding Rule

CFO Magazine - 9 October 2017
The net stable funding ratio was supposed to make very large banks safer to deal with in the wake of the liquidity problems encountered during the financial crisis. The more stable a bank’s funding sources, presumably, the more resistant it might be to financial crash, making it a safer counterparty. But now, on the eve of the rule’s implementation date, global banking regulators are looking to make compliance with the net stable funding ratio (NSFR) a little easier.
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Metric of the Month: Hurricane-Proof Accounts Receivable

CFO Magazine - 9 October 2017
Delays in accounts receivable (AR) equal less working capital and liquidity, making AR one area where improving efficiency can pay off exponentially. One measure of an efficient process is the number of people it takes to get the work done: The fewer the people it takes to do the job, the more likely it is that the team is doing the work the right way.
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JOBS Act Causes Post-IPO Volatility: Study

CFO Magazine - 6 October 2017
New research lends credence to concerns that there are inadequate protections for investors in companies that go public under the JOBS Act, resulting in higher risk premiums for issuers. The Jumpstart our Business Startups Act was signed into law in 2012 in the hope of spurring job creation by easing the process by which relatively small companies make initial public offerings. The law created a category of so-called “emerging growth companies” (EGCs), defined as IPO-issuing firms with less than $1 billion in revenues in the year prior to the offering.
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Capitalizing on the Platformization of the Economy

CFO Magazine - 5 October 2017
Just as every waiter in Hollywood has a script he’s looking to shop, it seems every MBA from Silicon Valley to Wall Street has a platform pitch in his or her back pocket. It’s not enough these days to have a great idea for a new tool or clever app. To break out in the marketplace, businesses need a plan for global domination through a platform business model. That evolution is having a big impact on the finance departments of multinational corporations, too. To fully understand the business implications of the platform movement, it’s important to first understand the nomenclature. Like most buzzwords, the term “platform” has been misappropriated so frequently it can be hard to discern exactly what a platform is.
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Human Capital: Risk vs. Uncertainty

CFO Magazine - 5 October 2017
In a world characterized by rapid technological change, perpetual product innovation, economic globalization, and generational and cultural shifts, the life cycle of products and business designs is shortening. Companies are constantly obliged to adapt. It is often human capital, more than financial or physical capital, that enables effective adaptation to these new realities. And it is often human capital that is at greatest risk of sudden depreciation or outright obsolescence within a business.
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How Execs Can Derisk Company Stock Holdings

CFO Magazine - 4 October 2017
Public-company executives and employees holding highly appreciated company stock often diversify out of some positions over time via outright sales of their shares and by using tools such as exchange funds, equity derivatives, and charitable trusts. However, for many reasons — contractual and securities-law restrictions, tax and estate-planning considerations, strong emotional attachment, belief in the stock’s upside — they typically retain some portion of the stock as a core, long-term holding.
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Understanding the Target's Perspective in Tech M&A

CFO Magazine - 4 October 2017
Traditional companies and tech firms have plenty of differences. Business models, cultures, metrics, compensation schemes, and ways of working are just a few. The match between a large, often bureaucratic corporation in a traditional industry and a nimble, fast-moving startup often appears ill-conceived. Yet in 2016, more than 8,800 tech firms found new owners or major investors, approximately 70% of which were outside the tech sector.
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SEC Shuts Down Two ICOs

CFO Magazine - 29 September 2017
The Securities and Exchange Commission today charged a businessman and two companies with defrauding investors in a pair of initial coin offerings (ICOs), according to an announcement late Friday. The digital coins were purportedly backed by investments in real estate and diamonds. The SEC complaint alleges that Maksim Zaslavskiy and his companies have been selling unregistered securities, and the digital tokens or coins being peddled don’t really exist.
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Hurricane Harvey Slows Consumer Spending

CFO Magazine - 29 September 2017
U.S. consumer spending rose only slightly in August, providing further evidence of Hurricane Harvey’s effects on the economy, while inflation remained stubbornly low. The Commerce Department said Friday that consumer spending increased just 0.1% last month, following a much larger 0.3% advance in July. It was the smallest gain since June. The slowdown reflected in part a 1.8% decline in sales of new cars and trucks, with Hurricane Harvey weighing on sales in the last week of August. Unseasonably mild temperatures in some parts of the country also reduced demand for utilities.
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A Majority of Companies Now Like the ACA

CFO Magazine - 29 September 2017
During the first few years after the Affordable Care Act’s 2010 passage, most companies were none too happy about new costs for taxes mandated by the law and for complying with its many requirements. 17Sep_ACAchartNow, a group that’s inherently interested in managing health-care costs — the people companies pay to run their benefits programs — are fine, on the whole, with keeping the seven-year-old law. Only about one-third of 300 health benefits professionals surveyed by Mercer in mid-September said they favor a full repeal and replacement.
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Why You Should Take the 'F' Out of FP&A

CFO Magazine - 28 September 2017
It wasn’t too long ago that a company with strong investment in and focus on financial planning and analysis (FP&A) was thought to be ahead of the competitive curve. But now, according to one source, companies shouldn’t even be involved in FP&A.
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Companies Piling Losses onto Balance Sheets

CFO Magazine - 25 September 2017
Companies may be managing earnings by shifting potential income-statement losses to the other comprehensive income (OCI) part of their balance sheets, the authors of a new study of OCI find. Charles Mulford Charles Mulford The report’s authors, Georgia Tech accounting professor Charles Mulford and graduate student Anna Babinets, infer from their findings “that companies are engaging in selective earnings management by reporting losses in OCI and excluding them from net income.”
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M&A Opportunities Abound - If Companies Lower Their Bar

CFO Magazine - 25 September 2017
Where are the mergers and acquisitions? Consumer confidence is high. Equity values have been climbing for years, and the markets have seen a significant bump since the presidential election, with the Dow Jones Industrial Average climbing 22% and the Nasdaq Composite 24% [as of Sept. 19]. And yet M&A activity appears stalled. Through mid-September this year, just $2.4 trillion in deals have been announced; that’s 23% lower than the value of deals by this point in 2015. Despite a few blockbusters like Amazon’s acquisition of Whole Foods and United Technologies’ bid for Rockwell Collins, this year there have been only 24 megadeals — those totaling more than $10 billion in value — compared with 38 over the same period in 2015.
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Facebook Scraps Share Reclassification Plan

CFO Magazine - 25 September 2017
Amid shareholder opposition, Facebook has abandoned a plan to reclassify its stock so CEO Mark Zuckerberg could sell billions of dollars of his shares without giving up any of his control of the company. Facebook’s move came on the eve of a trial in a shareholder class action challenging the plan to issue a class of C shares that would have the same economic benefits as Class A and Class B shares but would come with no voting rights.
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Google Buys HTC's Pixel Team for $1.1 Billion

CFO Magazine - 22 September 2017
Google has agreed to pay HTC $1.1 billion to bring employees of the Taiwanese firm who work on Pixel smartphones under its roof as it seeks to build up its hardware business. The deal covers about 2,000 engineers and technical staff employed in HTC’s mobile division. Google will also acquire a non-exclusive license for HTC intellectual property.
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How Is Regulatory Reform Likely to Proceed?

CFO Magazine - 21 September 2017
The great debate over the shape of post-crisis financial regulation is in full swing, with the House of Representatives, federal financial regulators, and the Trump administration all having staked out their positions on reforming the financial services industry.
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Hurricane Harvey Buffets Builder Confidence

CFO Magazine - 19 September 2017
The recent hurricanes in Texas and Florida appear to have shaken the confidence of home builders. The National Association of Home Builders on Monday reported that its housing market index (HMI) fell 3 points to 64 in September amid concerns that the hurricanes will make it difficult for builders to find workers and materials. The August reading was revised downward by a point.
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Rope Tightens Around Global Tax Avoidance

CFO Magazine - 18 September 2017
The OECD’s base erosion and profit shifting (BEPS) project, with an overall goal of reducing global loss of tax revenues due to double non-taxation, has created the need for careful monitoring of developments in international tax law. Christopher Howe Christopher Howe Universal revenue needs are fueling an unprecedented period of international cooperation on taxation, marked by the implementation of new information-exchange protocols between countries and stringent national and international anti-tax-avoidance rules. Like it or not, the playing field is being redesigned to switch focus from whether income will be taxed, to where it will be taxed.
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Oracle Shares Slip on Cloud Revenue Outlook

CFO Magazine - 15 September 2017
Oracle shares fell more than 7% on Friday as the company’s quarterly guidance came in below analysts’ estimates amid a slowdown in the growth of its cloud business. For the first quarter, Oracle reported total revenue increased 7% to $9.19 billion, driven by a 51% gain in cloud revenue to $1.5 billion. Software-as-a-service (SaaS) recorded revenue growth of 62% while platform-as-a-service (PaaS) and infrastructure revenue rose 28%.

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