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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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Equifax Hack Exposes App Patch Vulnerability

CFO Magazine - 14 September 2017
The massive data breach at Equifax appears to highlight a security vulnerability for many large companies — they do not maintain a proper inventory of their applications. Equifax confirmed on Wednesday that the hackers exploited a flaw in Apache Struts, a popular open source framework for creating Java apps. The breach, which may have exposed the personal data of as many as 143 million U.S. consumers, occurred in mid-May.
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CFOs Should Partner with Chief Procurement Officers

CFO Magazine - 14 September 2017
For most companies, supplier spending is their single largest cost — about 50% of revenue for manufacturing and 30% for services. And yet, this major contributor to profit and loss is often buried as many companies have poor visibility into their procurement costs.
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Closing the Confidence Gap in Sustainability Data

CFO Magazine - 13 September 2017
Investors, financial analysts, and rating agencies around the world are increasingly seeking relevant and trustworthy reports on sustainability performance to help guide their assessments of a company’s value-creation capacity and capability. Therefore, companies that utilize effective internal controls around nonfinancial data will earn greater confidence from key stakeholders and likely earn a value premium relative to their peers.
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Value Drivers

CFO Magazine - 11 September 2017
Choosing the top finance chiefs for the third annual installment of CFOs to Watch was tricky. We wanted to honor a CFO’s past performance but, like stock-pickers, also wanted to select candidates with an eye toward what they might do in the next 12 months. Consequently, the 20 finance chiefs named on the list really satisfy two requirements: they’ve made sizable contributions to their companies’ past successes, and, at the same time, the current disruptive forces buffeting their organizations may vault these CFOs into even greater prominence.
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Dealing with a Deficit (of IT Talent)

CFO Magazine - 11 September 2017
Middle-market companies are struggling to attract and retain technology employees — and looking to managed IT services providers and the cloud for help in meeting the talent shortfall. A recent CFO Research survey of 123 U.S.–based middle-market senior finance executives, conducted in collaboration with RSM, finds that about half (49%) of the finance chiefs say the inability to attract and retain qualified technology talent adversely impacts them. Survey respondents represent firms with annual revenues between $25 million and $200 million, and a plurality of respondents (35%) carry the title of CFO.
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Getting Over Hurdle Rates

CFO Magazine - 11 September 2017
As upbeat as CFOs may feel about the growth prospects for their own companies and the broader economy, they have yet to loosen the criteria they use for making investment decisions. In the second-quarter Duke University/CFO Magazine Global Business Outlook Survey, which collected responses from 750 senior finance executives, respondents revealed that they have maintained unusually high — even unrealistic — hurdle rates, or the minimum return they expect from any project they opt to invest in.
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Career Census

CFO Magazine - 11 September 2017
When it comes to schooling and experience, there’s no such thing as a “typical” CFO, except that they tend to be well-educated and, still today, a majority are men. How much do you know about the backgrounds and careers of the top finance executives at the 250 largest publicly held U.S. companies? Take our quiz to find out.

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