The article is without a doubt a very timely one: it deals with something related to the on going financial turmoil throughout the globe. Week after week, stocks and markets throughout the world continue to tumble, and the end to this downturn is no where near in sight. As one turns on the television to watch the news or as one reads the paper, another company is filing for bankruptcy, or lower growth forecasts sending stock markets downhill. It seems as though there is no other news out there other than the global financial crisis. In the midst of all these are the company executives, in particular the Chief Financial Officers (CFO) who are trying to find ways to prevent their particular companies from collapsing. No one will deny the important role that the CFO plays in a company. It is on his or her shoulder that the fate of the company's finances will lie; he or she can either make or break the company.
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Millions or even billions of dollars are constantly in the hands of the CFOs of multinational corporations and financial institutions. Now more than ever, CFOs are in the limelight, as the world watches them and tries to see how they will overcome, or even fail, in the midst of this crisis.
The article cited, taken from the website of the magazine The Economist, has no particular author. It is part of the general articles that the magazine as a whole publishes and includes in its print edition. The magazine is known for its regular articles and columns on the global economy, on business, and financial matters. They also tackle global political issues in relation to business, but often times even on those matters related purely on politics and governance. The magazine offers views from the perspective of people from various fields, be they financial analysts or political scientists.
The article in particular focuses on the role of the CFO in the current financial crisis. It refers to the important role that the CFO plays in keeping companies afloat. CFOs are crucial in managing the finances of the company. The articles also notes that few CFOs in the field have experienced a financial turmoil quite like this, since most of the CFOs stay with a company for a period no longer than 30 months, with a few exceptions. Given their limited experience, it is not surprising that several CFOs have already failed, or are having a difficult time coping with the global crisis. The article also notes that part of the problem was that in the late 90's, CFOs were hired for their expertise in capital markets and financial engineering, instead of their accounting and financing skills. This led to a lot of CFOs being unable to manage the company finances well, which eventually led to the collapse of companies like Enron and World Com. Today, companies are now looking for CFOs who are financial controllers and certified practicing accountants, a recognition of the fact that CFOs don't only have to rake in money for they company, they actually have to mange and sustain it. The article also cites the need to return to the CFOs who are manager's of the company's balance sheets, overseers of corporate risk, and ensurers of the financial enterprise, citing author Bill George.
The article also mentioned, albeit in a limited manner, the huge paychecks that CFOs and other company executives are getting despite losses in their companies. The article does not explicitly say that there is something wrong with this practice, but it goes on to state that CFOs should earn them. Among company executives, it is the paycheck of the CFO that has significantly rose in the past few years. This perhaps shows an increasing recognition of the important role they play in the company, especially during the current financial turmoil.
The article presents several interviews of company executives and financial analysts to back-up its claims. It has also presented statistics from several surveys as proof of the figures they used in the article.
A reading of the article has given the reader a better picture of the role that the CFO plays in the financial world, and most especially during the financial crisis. It has also shown the reader that what is important is not simply knowing how to make money, but also knowing how to manage and keep it as well. The failures of past CFOs should be a lesson for the new and incoming CFOs. They should focus more on balancing the books and ensuring that the company finances are running smoothly. CFOs should also learn how to work with other departments and better balance competing interests in the company.
However, this reader thinks that the article should have focused more on the fat paychecks that the CFOs receive. It should have made a more in depth discussion and analysis of this issue, which undoubtedly is also important. It is the view of the reader that company executives should be chastised for paying themselves millions despite the losses that their companies are suffering. CFOs should not just be praised for the work that they do, but they should also be reminded that they have a duty to ensure that the company stays afloat, because thousands, even millions of lives are at stake with every decision that they make.
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