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To forecast or not to forecast? Bew are firms that debar to disregard yearly financial targets Feb 26th 2009 | from the print var. [pic]Illustration by Claudio Munoz DIVINING what the future holds is tricky at the best of measure; at the worst, it is devilishly difficult. So why bother? Citing the nut house of the worldwide downturn, a growing number of companies, including Unil eer, an Anglo-Dutch consumer-goods firm, Costco, a coarse American retailer, and Union Pacific, one of Americas life-size railroads, cave in decided not to give annual bread estimates for 2009. If incessantly there was a moment for firms to write their crystal balls ch merelynian wraps, this may appear to be it. tho m both companies are still issuing annual forecasts in spite of the doubtfulness roiling their markets. On February 24th, for instance, Home Depot, some other American retailer, estimated that its revenues and earnings per share from continuing operati ons would origin 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 furrow strings ever tighter, the world is so topsy-turvy that any financial aspiration will be out of day of the month as soon as the ink dries on the pinch 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, cut investment in research and development or juvenile machinery, for instance, even if that amends their firms longer-term prospects. Better, then, to stay mum rather than endangerment a mauling. But such argumen! ts do not nasty that companies should ditch forecasts altogether. just because peering...If you want to get a honest essay, order it on our website: OrderCustomPaper.com

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