more-arw search

Most Executives Have Made One Significant Purchase Of A Capital Good In Last Year, Says Survey

Around four-fifths, or 78 percent of middle-market executives have purchased a

Around four-fifths, or 78 percent of middle-market executives have purchased a capital good within the last year, according to a survey that was recently conducted by global finance firm CIT Group Inc. In addition, 78

Around four-fifths, or 78 percent of middle-market executives have purchased a capital good within the last year, according to a survey that was recently conducted by global finance firm CIT Group Inc. In addition, 78 percent indicated that they plan to make a capital goods purchase holding significant value in the next six-to-18 months.

These and other findings were the result of the study called the "U.S. Capital Goods and Equipment Financing Outlook: A Focus on Essential Acquisitions" that was released by CIT and Forbes Insights.

Study sample

The survey is the latest in the CIT Outlook Series of industry studies centered around the opinions of C-level executives working at middle market firms. The study was culled using data gathered from 279 of these executives, and involved their budgeting and decision making related to equipment financing and the purchase of capital goods.

"Our study found that, despite general economic uncertainties, more than a third of executives reported their business need was simply too strong to delay their equipment purchase," Ron Arrington, Global President of CIT Vendor Finance, said in the statement. "Executives also indicated that customer demand made such investments mandatory, or pointed to emerging opportunities that required new equipment. And as they seek to acquire new equipment, nearly two-thirds said the availability of vendor financing plays an important role in their decision making process."

Vince Belcastro, managing director and head of CIT Capital Equipment Finance, said in the statement that "executives overwhelmingly indicated their intent to acquire capital goods over the next six to 18 months. For buyers, this could present an opportunity to negotiate a good deal on assets that can go a long way toward improving efficiency or perhaps growing top-line revenues."

Crucial findings of the study

Cash is the most-commonly used means of buying new capital, with 54 percent of participants saying they would use this method for payment. The next-frequent method was credit, with 45 percent of respondents indicating they would use bank credit lines, 32 percent stating a preference for balance sheet financing and 27 percent indicating a preference for asset-backed financing.

Nearly two-thirds, or 62 percent of participants indicated that the ability of vendors to provide financing was an important factor when deciding who to work with.

The executives participating indicated that bolstering efficiency was a major motivator for buying new capital equipment, with 31 percent of respondents indicating that their recent capital purchase made their production process more efficient. 

Topics:
Products and Companies: