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Economic Outlook Remains Uncertain

CPA financial executives share insights on credit, collections, staffing and customer demand.

May 2009
by Matthew Lamoreaux/Journal of Accountancy

Recessions — roughly two per decade — have occurred quite regularly since World War II. Most last less than four quarters, according to International Monetary Fund (IMF) data. But the depth and breadth of recessions are notoriously difficult to predict.

This article focuses on what CPA financial executives have experienced in the current recession, using data from the first quarter Business and Industry Economic Outlook Survey conducted by the AICPA and the University of North Carolina’s Kenan-Flagler Business School. The JofA supplemented this data by interviewing CPA financial executives in multiple industries and regions of the country.

Credit and Operating Capital

The executives, interviewed in March, shared experiences correlating with survey results that indicated 23 percent of executives had experienced higher credit costs and tighter restrictions.

For Manship Media Group in Baton Rouge, La., credit is a top concern. The 100-year-old family-owned business operates the daily newspaper The Advocate and two ABC-affiliated television stations. CFO Ralph Bender, CPA, explains that the company has substantial fixed costs and debt related to printing and broadcast equipment. “As the business has significantly retreated in terms of revenue, that’s put some strains on our ratios and caused some increases in the cost of credit,” he says.

This article has been excerpted from the Journal of Accountancy. View the full article here.