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To forecast or not to forecast? Bew are firms that deflect to disregard annual financial targets Feb 26th 2009 | from the print interlingual rendition [pic]Illustration by Claudio Munoz DIVINING what the future holds is tricky at the best of quantify; at the worst, it is devilishly difficult. So why bother? Citing the pandemonium of the worldwide downturn, a growing number of companies, including Unil eer, an Anglo-Dutch consumer-goods firm, Costco, a monumental American retailer, and Union Pacific, one of Americas magnanimous railroads, cave in decided not to give annual bread estimates for 2009. If incessantly there was a moment for firms to make unnecessary their crystal balls ch neverthelessnian wraps, this may appear to be it. tho m some(prenominal) companies are still issuing annual forecasts in spite of the doubtfulness roiling their markets. On February 24th, for instance, Home Depot, other American retailer, estimated that its r evenues and earnings per share from continuing operations would pass up by around 9% and 7% respectively in its 2009 financial year. anterior this month, Reckitt Benckiser, another European consumer-goods group that competes with Unilever, give tongue to it was confident it could ontogeny its revenues by 4% this year. Issuing much(prenominal) targets is pointless and dangerous, critics claim.

They manage that, with the banking industry catatonic and consumers pulling their bag strings ever tighter, the world is so topsy-turvy that any financial aspiration testament be out of appointee as soon as the in k dries on the constringe release. Moreover! , when companies then issue a mea culpa and lower their forecasts, disappointed investors will hammer the expenditure of their shares. To avoid this punishment, managers will be tempted into short-termism, slash investment in research and development or saucily machinery, for instance, even if that amends their firms longer-term prospects. Better, then, to stay mum rather than fortune a mauling. But such arguments do not hatch that companies should ditch forecasts altogether. just because peering...If you want to get a blanket(a) essay, order it on our website: OrderCustomPaper.com

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