http://www.nytimes.com/2009/03/26/business/media/26tele.html?_r=1&ref=business
Summary
This article talks about the CBC is cutting jobs. CBC, the publicly owned operator of national television and radio networks, will cut about 800 jobs and try to sell assets to fight a growing financial shortfall caused by an advertising downturn, it said on Wednesday.It said its projections assumed the government would authorize 125 million Canadian dollars in asset sales.Aside from government funding, the CBC normally generates about 600 million Canadian dollars a year in revenue from commercial activities.About 400 employees are being laid off from the CBC’s English-language service, 335 will depart the French-language arm and 70 are being cut in other areas of the company.
Connection
The connection between this article and accounting is the financial statement. Since CBC is cutting jobs and trying to sell assets to fight a growing financial shortfall, its salaries expense would be lower and will have more cash on hand instead of long term assets. Although CBC maybe get support from the government like other banks do, but their status is alert. The owner would possibly decide to change the management for advertising since the main reason causing the downfall is the poor advertising.On the other hand, shareholders would not be happy and may be selling their interests in the company that seem to be heading for trouble. Instead of selling the shares, the owner may consider selling the company and will make the financial statement looks as good as possible.
Reflection
Recently, we can see many news about xxx company cutting of jobs or cutting work hours and etc.. As we all know, CBC is the 1st broadcasting company in Canada. Just like the Berkshire company, which has a long history, but they were facing their annual worst last fiscal period due to the wrong decision making by Buffett. Although Berkshire didn't need to sell assets or cut off jobs to reduce company expenses, the company was not in a good status. I think the government of Canada will support CBC just like the US government supports banks in the states.
Sunday, April 5, 2009
Wednesday, March 11, 2009
Toyota cuts working hours and pay
http://news.bbc.co.uk/2/hi/business/7936397.stm
Summary
This article is about carmaker Toyota cutting employees' wages and working hours by 10%. The cuts will take effect on April 1st and will last for one year. This plan will affect 4500 workers in Britain. Also, the cutting plan causes 11 factories to reduce production and 3 factories stopped producing cars. Toyota has already suspended a night shift on its production line and will shut production for a total of four weeks in 2009. It has already cut 200 temporary jobs and opened a voluntary redundancy scheme last week but has insisted big layoffs would not be necessary. Toyota has already said it will post the first group-wide annual operating loss - totalling more than £3 billion - in its 70-year history.
Connection
Chapter 16 is basically about payroll to employees. The connection here is that since Toyato is cutting on pay and working time, workers' annual salary would be lower. Also, the cutting of the wages is called deduction which connects to the payroll equation: gross pay - deductions = net pay, which leads to a lower net pay. Although the article is talking about Toyota in Britain, I think there are still commissions or other government pensions for employees. However, due to net loss of the company, there might be less people getting less commissions. On the other hand, the government should provide extra pensions for old ages and unemployment.
Reflection
Recently, we can see many articles related to car companies encounting less sales causing net loss problems. Since the first blog entry until now, all my articles are related to the economic depression nowadays manly due to the stock market crash. However, car companies closing down factories and reduce production is always not a wise way because even they produce less cars, their sales will not increase. Thus, they start to cut employees' wages to reduce expenses. However, this might lead to a strike or other possibilities. Therefore, the companies should still produce the same amount of cars and keep the employees but at the same time reduce their selling prices. Although reducing selling prices will not increase the net income a lot but it is still better than getting a net loss like most companies are facing today.
Summary
This article is about carmaker Toyota cutting employees' wages and working hours by 10%. The cuts will take effect on April 1st and will last for one year. This plan will affect 4500 workers in Britain. Also, the cutting plan causes 11 factories to reduce production and 3 factories stopped producing cars. Toyota has already suspended a night shift on its production line and will shut production for a total of four weeks in 2009. It has already cut 200 temporary jobs and opened a voluntary redundancy scheme last week but has insisted big layoffs would not be necessary. Toyota has already said it will post the first group-wide annual operating loss - totalling more than £3 billion - in its 70-year history.
Connection
Chapter 16 is basically about payroll to employees. The connection here is that since Toyato is cutting on pay and working time, workers' annual salary would be lower. Also, the cutting of the wages is called deduction which connects to the payroll equation: gross pay - deductions = net pay, which leads to a lower net pay. Although the article is talking about Toyota in Britain, I think there are still commissions or other government pensions for employees. However, due to net loss of the company, there might be less people getting less commissions. On the other hand, the government should provide extra pensions for old ages and unemployment.
Reflection
Recently, we can see many articles related to car companies encounting less sales causing net loss problems. Since the first blog entry until now, all my articles are related to the economic depression nowadays manly due to the stock market crash. However, car companies closing down factories and reduce production is always not a wise way because even they produce less cars, their sales will not increase. Thus, they start to cut employees' wages to reduce expenses. However, this might lead to a strike or other possibilities. Therefore, the companies should still produce the same amount of cars and keep the employees but at the same time reduce their selling prices. Although reducing selling prices will not increase the net income a lot but it is still better than getting a net loss like most companies are facing today.
Sunday, March 1, 2009
Buffett's Berkshire Posts Worst Annual Results Ever
http://www.foxbusiness.com/story/markets/buffetts-berkshire-posts-worst-annual-results/
Summary
On feburary 28th, Buffett sent his shareholders a letter. In the letter, Buffett claimed that the purchase of ConocoPhillips shares while oil and gas prices were near their peak was a terrible timing and mistake of his own. At the end of 2007 Berkshire Hathaway had $1.75 million shares of ConocoPhillips, and in 2008, Berkshire Hathaway had 8.49 million shares of ConocoPhillips. Buffett also said that he didn't predict that the oil prices would fall dramatically, this caused Berkshire Hathaway losing amost $2 billion. Berkshire’s net income in the fourth quarter of 2008 was $117 million, down 96% from $2.9 billion in the same period the prior year. That's why Buffett called 2008 the worst year of Berkshire.
Connection
The connection between this story and chapter 15 is the comparison of financial data. Buffett, as the insider executive of the company didn't do a good job on looking for danger signals and unfavourable trends this year. The owner would possibly decide to change the management if Buffett doesn't increase the profitbality next year. On the other hand, shareholders would not be happy and may be selling their interests in the company that seem to be heading for trouble. In Buffett's letter to shareholders, Buffett used trend analysis to compare Berkshire's performance. It's net income was 96% down and annual income declined to $4.99 billion in 2008 from $13.21 billion the prior year amid declines in the value of its stock holdings, as well as weak results from areas such as its insurance division.
Reflection
In this case, all we need to look at is Buffett's decision of investing ConocoPhillips. Buffett brought in many shares and become the largest shareholder of the company. Besides, Buffett also incresed the shares of NRG Energy Inc.. Because of the economy nowadays, Buffett thought that energy demand would be increasing throughtout the next decade. The International Energy Agency reported that the energy demand would inrease 25% in the next 20 years even under economic depression. However, the oil price was near the peak, the increasing demand must have lower the prices. Buffett qutoed,“I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking.” to show his attitude towards next year.
Summary
On feburary 28th, Buffett sent his shareholders a letter. In the letter, Buffett claimed that the purchase of ConocoPhillips shares while oil and gas prices were near their peak was a terrible timing and mistake of his own. At the end of 2007 Berkshire Hathaway had $1.75 million shares of ConocoPhillips, and in 2008, Berkshire Hathaway had 8.49 million shares of ConocoPhillips. Buffett also said that he didn't predict that the oil prices would fall dramatically, this caused Berkshire Hathaway losing amost $2 billion. Berkshire’s net income in the fourth quarter of 2008 was $117 million, down 96% from $2.9 billion in the same period the prior year. That's why Buffett called 2008 the worst year of Berkshire.
Connection
The connection between this story and chapter 15 is the comparison of financial data. Buffett, as the insider executive of the company didn't do a good job on looking for danger signals and unfavourable trends this year. The owner would possibly decide to change the management if Buffett doesn't increase the profitbality next year. On the other hand, shareholders would not be happy and may be selling their interests in the company that seem to be heading for trouble. In Buffett's letter to shareholders, Buffett used trend analysis to compare Berkshire's performance. It's net income was 96% down and annual income declined to $4.99 billion in 2008 from $13.21 billion the prior year amid declines in the value of its stock holdings, as well as weak results from areas such as its insurance division.
Reflection
In this case, all we need to look at is Buffett's decision of investing ConocoPhillips. Buffett brought in many shares and become the largest shareholder of the company. Besides, Buffett also incresed the shares of NRG Energy Inc.. Because of the economy nowadays, Buffett thought that energy demand would be increasing throughtout the next decade. The International Energy Agency reported that the energy demand would inrease 25% in the next 20 years even under economic depression. However, the oil price was near the peak, the increasing demand must have lower the prices. Buffett qutoed,“I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking.” to show his attitude towards next year.
Monday, December 8, 2008
Credit-card companies 'sticking it to' Canadians with high fees, retailers say
http://www.cbc.ca/canada/story/2008/09/11/credit-fees.html
Summary:
This article is mainly about the rising rate for credit cards. Last year, the transaction fees for credit card companies reached $4.5 billion, and are collecting extra miscellaneous fees from customers. The Retail Council of Canada launched a campaign called" Stop Sticking It to Us," in order to call on the government to weigh in on credit card fees. The council estimates nearly $2 of every $100 Canadians spend using credit cards goes directly to the issuing banks. Most of the money comes from so-called "interchange fees" which is calculated as a percentage of the transaction. Also, personal credit card fees increased from 1.6% to 1.7%, while business fees increased significantly. However, the credit card companies respond that interchange rates are reasonable.
Connection:
Obviously, the connection between this article and chapter 14 is credit cards. Credit cards are used in our society that we can consume without cash. However, the credit card company does not provide free services. The credit card companies charge transaction fees or annual fees to the cardholders, and interest on advanced of cash given to them and interest on overdue balances on the cards. An annual fee is charged to each merchant. Cardholders don't get full value for the gross amount of the credit card slips while discounts are taken off the credit card slips deposited by the merchants. This article talks about transaction fees and so-called "interchange fees" which is an extra charge of the credit card nowadays in Canada.
Reflection:
After reading this article, I'm amazed by how the whole business world is affected by the global economy comes down. Looking back to my previous two blogs, they all talk about how the economy crashes brings down the business. Credit companies have been using different ways to get payments in on time by giving higher rate and strickter rules for late payments. Credit companies higher the transaction fees, while some companies hoping economy would come back so they don't have to waste confidence in consumers from using credit cards especially it's near Christmas, the season of consuming. I think that companies should have lower the rate at this point of the time to increase credit card usage, but the situation is ver hard now for the companies when they're facing bankruptcy. I hope the economy would come back, for the benefits of both business and consumers.
Summary:
This article is mainly about the rising rate for credit cards. Last year, the transaction fees for credit card companies reached $4.5 billion, and are collecting extra miscellaneous fees from customers. The Retail Council of Canada launched a campaign called" Stop Sticking It to Us," in order to call on the government to weigh in on credit card fees. The council estimates nearly $2 of every $100 Canadians spend using credit cards goes directly to the issuing banks. Most of the money comes from so-called "interchange fees" which is calculated as a percentage of the transaction. Also, personal credit card fees increased from 1.6% to 1.7%, while business fees increased significantly. However, the credit card companies respond that interchange rates are reasonable.
Connection:
Obviously, the connection between this article and chapter 14 is credit cards. Credit cards are used in our society that we can consume without cash. However, the credit card company does not provide free services. The credit card companies charge transaction fees or annual fees to the cardholders, and interest on advanced of cash given to them and interest on overdue balances on the cards. An annual fee is charged to each merchant. Cardholders don't get full value for the gross amount of the credit card slips while discounts are taken off the credit card slips deposited by the merchants. This article talks about transaction fees and so-called "interchange fees" which is an extra charge of the credit card nowadays in Canada.
Reflection:
After reading this article, I'm amazed by how the whole business world is affected by the global economy comes down. Looking back to my previous two blogs, they all talk about how the economy crashes brings down the business. Credit companies have been using different ways to get payments in on time by giving higher rate and strickter rules for late payments. Credit companies higher the transaction fees, while some companies hoping economy would come back so they don't have to waste confidence in consumers from using credit cards especially it's near Christmas, the season of consuming. I think that companies should have lower the rate at this point of the time to increase credit card usage, but the situation is ver hard now for the companies when they're facing bankruptcy. I hope the economy would come back, for the benefits of both business and consumers.
Thursday, October 30, 2008
Sale signs up early as consumers cut back
http://www.financialpost.com/story.html?id=878065
Summary
The article I read is about the early discount of retailers before Christmas in order to attract to customers due to fear of the stock market. Many retailers are watching the economic crunch with the same mixture of horror and dread gripping consumers and wonder whether shoppers will stay away in droves during what is traditionally the busiest shopping period of the year between Thanksgiving and Christmas. Marketers are focusing on value over style across every category. And at a time of the year when sale signs are generally rare in retail store windows, they are abundant. Many big stores in Canada like Sears started to discount at the beginning of October and is running until Christmas.
Connection
The connection between this article and chapter 12 is the cash discount. A cash discount is a reduction of the amount of a bill if payment is made on or before the discount date stated on the bill. As stated, the purpose of a cash discount is to encourage the customer to pay promptly. Businesses offer discount to customers in order to increase sales. Although in this case, most of the sales is made instantaneously at the time of the purchase by cash or credit card. However, when an item needs to be delivered or an invoice is issued, cash discount occurs which also often happens in the busy Christmas time. Besides the discount, the terms of sale will also be changed as discount takes place. Almost all the term of sales of a business will be changed during the sales period which may favor the customers.
Reflection
After reading this article, and compare this article to the previous article in chapter 11, I’m amazed by how the stock market can affect a business’s routine. To keep the business running, retailers have to make discounts. And now, the discounts which usually take place in Christmas and the time people spend most money on are happening now. Sears introduced the Budget Relief Price Drops sale, which is smart. On the other hand, the limit of discount has increased, retailers made the due date from 60 days to 30 days to operate the money properly. Consuming is a big part of the impulse towards the economy. So, increase consuming may bring back the stock market which is good for both the business and consumers.
Summary
The article I read is about the early discount of retailers before Christmas in order to attract to customers due to fear of the stock market. Many retailers are watching the economic crunch with the same mixture of horror and dread gripping consumers and wonder whether shoppers will stay away in droves during what is traditionally the busiest shopping period of the year between Thanksgiving and Christmas. Marketers are focusing on value over style across every category. And at a time of the year when sale signs are generally rare in retail store windows, they are abundant. Many big stores in Canada like Sears started to discount at the beginning of October and is running until Christmas.
Connection
The connection between this article and chapter 12 is the cash discount. A cash discount is a reduction of the amount of a bill if payment is made on or before the discount date stated on the bill. As stated, the purpose of a cash discount is to encourage the customer to pay promptly. Businesses offer discount to customers in order to increase sales. Although in this case, most of the sales is made instantaneously at the time of the purchase by cash or credit card. However, when an item needs to be delivered or an invoice is issued, cash discount occurs which also often happens in the busy Christmas time. Besides the discount, the terms of sale will also be changed as discount takes place. Almost all the term of sales of a business will be changed during the sales period which may favor the customers.
Reflection
After reading this article, and compare this article to the previous article in chapter 11, I’m amazed by how the stock market can affect a business’s routine. To keep the business running, retailers have to make discounts. And now, the discounts which usually take place in Christmas and the time people spend most money on are happening now. Sears introduced the Budget Relief Price Drops sale, which is smart. On the other hand, the limit of discount has increased, retailers made the due date from 60 days to 30 days to operate the money properly. Consuming is a big part of the impulse towards the economy. So, increase consuming may bring back the stock market which is good for both the business and consumers.
Wednesday, October 8, 2008
Oil falls on downturn fears
Summary
The article that i read is about the recent oil price falling as a series of rescue moves by polivy makers around the world failed to lift fears the global economy was heading for a meltdown.On Wednesday oil hit a 10-month low of 86.05 in US and the oil hit an all-time low in some countries globally. Although the oil rate cut made by the financial policy makers was to try to lift the stock or credit markets, the moves failed as the IMF said the world economy was set for a major downturn with the US and Europe either in or on the brink of recession. However, gasoline stocks rose 7.2 million barrels to 189.8 million barrels last week.
Connection
The connection between this article and chapter 11 is the concept of merchandise business. First of all, the gas producer, which is the wholesaler sells the low price oil to the business, and the business sells them to the public in low profits. When the cost of goods sold is close to the purchase price, it determines the gross profit. Due to the low gross profit, expenses may not be covered and come up with a net loss. Also, the business uses the perpetual inventory system to get caught up with the stock market instead of the inefficient periodical inventory method.
Reflection
The falling of oil also brings down the purchases price from the business. However, this is also depends on the running of stock markets. Investors tend to sell stuff with a higher price and buy stuff in lower price later or in the next fiscal period, but if the stock markets turn around, the higher price the company sells will be the higher price purchases. This can possibly make a company fail to short sell all the inventories, which comes up with a net loss and is always fatal for the companies. Like the situation of the Lehman Brothers and the purchase of Merril Lynch. Although the financial makers tend to throw out money to bring back the stock markets so that businesses can gain back the loss as well as the profits, the investors still need to be worried about the next stock market which maybe another big turn around. Even if the stock market is being brought up, the huge amounts of difference between the selling price and purchase price during the oil decreasing period is very hard to gain back.
http://ca.news.finance.yahoo.com/s/09102008/6/finance-oil-falls-below-88-downturn-fears.html
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