Financial Statements
Question 1:
Judging from the American Apparel’s income statements available from 2007-present, signs of declination were projected as early as 2008. The declination of the business was resulted by the increase of expenses and the lack of sales. The unusual expenses began to accumulate since 2008 from $0.64 million to $8.6 million as of 2010. The accumulation of the unusual expenses has contributed to American Apparel’s declination. In addition, due to the rapid expansion of the business and the inflation of raw materials for production, the cost of revenue has also increased over the years. In addition, the lack of sales is evident in the company’s balance sheet as its inventory figures decreased from 2008 to 2009, in an attempt to rid its excess inventory from the previous year. Furthermore, the company’s ways of advertising has led to its own demise. Through the provocative advertisements, the company has tarnished its own reputation and has raised concerns to many of its consumers regarding the suggestive advertisements. On top of the racy advertisements, American Apparel’s CEO, Dov Charney, is currently facing a series of lawsuits regarding sexual assaults to several employees which further damages the company’s reputation.
Question 2:
From my perspective, I believe that American Apparel should allocate its recent $14 million injection into Research and Development under investing activities. By providing its consumers with the fresh, slick, and comfortable fabrics, while maintaining its current fashion styles, the company has a shot at reviving its tarnished image. Successful fashion company such as Nike is always coming up with new materials to lighten its products and improve the qualities in order to monopolize the world of sporting fashion. Moreover, a fraction of that $14 million funding should be invested into the advertising expense under investing activities to revamp its reputation for provocative and racy advertisements in the past.
Monday, May 2, 2011
Friday, April 8, 2011
Buffett puts US$9B in deal for engine oil
Article:
http://www.nationalpost.com/todays-paper/Buffett+puts+deal+engine/4439806/story.html
Summary:
The article revolves around Berkshire’s recent investments from the acquisition of Lubrizol Corp. to the order of approximately 120 Bombardier Inc. planes. Berkshire has decided to acquire Lubrizol Corp. by means of purchasing Lubrizol’s shares with cash at US$135, approximately 28% more than the closing price on March 11. Immediately after the news release of Berkshire’s acquisition, Lubrizol’s share price increased by 27%. Through the purchase of Lubrizol, a maker of engine lubricants, Berkshire can fuel its current investments on cars, trucks, freight railroads, and luxury jets. In addition, Berkshire has decided to purchase approximately 120 Bombardier Inc. planes in an attempt to rebound in luxury travel. Moreover, firms will soon invest into fuel products that improve transportation efficiency due to the significant increase in fuel prices as stated by Meyer Shields, a Baltimore based analyst.
Connection:
The recent US $9-billion acquisition of Lubrizol Corp. by Berkshire would cause a decrease in the cash flow statement. As a result, the Purchase of property, plant, and equipment account, under investing activities, will have a negative value of $9 billion because Warren Buffet’s Berkshire will acquire Lubrizol Corp’s share in terms of cash at $135 a share. The 27% increase in Lubrizol’s share value after the acquisition by Berkshire could potentially lead to the distribution of dividends depending on the Lubrizol’s shareholder’s decision. The value of dividends per share can be calculated by adding net income to the difference of the beginning and ending retained earnings, all divided by the number of shares issued. In addition, Berkshire’s NetJets Inc. filed an order for approximately 120 Bombardier Inc. planes on March 2 which would result in an overall decrease in the cash account and an increase in the NetJets Inc.’s capital assets with respect to the total value of the ordered planes. Moreover, as time passes, the accumulated amortization account would increase due to the annual depreciation of the company’s capital assets such as the Bombardier Inc. planes.
Reflection:
From my perspective, I believe that Berkshire’s acquisition of Lubrizol Corp is definitely beneficial Berkshire. Not only can Berkshire reduce its fuel and lubricant expenses for its current investments in transportations which include cars, trucks, freight railroads, and even jets, it can also take advantage of the increasing demand for engine lubricants and fuel as shipping of goods increase around the world. However, despite the recent increase of 27% in Lubrizol’s share value after the acquisition, the likelihood of dividends distribution by Berkshire towards the end of the year is highly unlikely. Berkshire has a reputation of conserving cash dividends; in fact, Berkshire has not authorized a dividend to its shareholders since 1967. Personally, I would not invest into Berkshire due to the minute profit, high share price value, and the lack of dividends. Despite the large scaled acquisition of Lubrizol, the second largest acquisition the recent decade by Berkshire, the reduction of $9 billion in the company’s cash flow should not affect the company’s day to day operation since the company is in possession of approximately $40 billion cash. With the excess reservoir of cash, Berkshire can continue to invest into what it seems beneficial to both the company and shareholders. However, Berkshire should conserve a portion of its cash for emergencies, investment failures, or future economic crisis.
http://www.nationalpost.com/todays-paper/Buffett+puts+deal+engine/4439806/story.html
Summary:
The article revolves around Berkshire’s recent investments from the acquisition of Lubrizol Corp. to the order of approximately 120 Bombardier Inc. planes. Berkshire has decided to acquire Lubrizol Corp. by means of purchasing Lubrizol’s shares with cash at US$135, approximately 28% more than the closing price on March 11. Immediately after the news release of Berkshire’s acquisition, Lubrizol’s share price increased by 27%. Through the purchase of Lubrizol, a maker of engine lubricants, Berkshire can fuel its current investments on cars, trucks, freight railroads, and luxury jets. In addition, Berkshire has decided to purchase approximately 120 Bombardier Inc. planes in an attempt to rebound in luxury travel. Moreover, firms will soon invest into fuel products that improve transportation efficiency due to the significant increase in fuel prices as stated by Meyer Shields, a Baltimore based analyst.
Connection:
The recent US $9-billion acquisition of Lubrizol Corp. by Berkshire would cause a decrease in the cash flow statement. As a result, the Purchase of property, plant, and equipment account, under investing activities, will have a negative value of $9 billion because Warren Buffet’s Berkshire will acquire Lubrizol Corp’s share in terms of cash at $135 a share. The 27% increase in Lubrizol’s share value after the acquisition by Berkshire could potentially lead to the distribution of dividends depending on the Lubrizol’s shareholder’s decision. The value of dividends per share can be calculated by adding net income to the difference of the beginning and ending retained earnings, all divided by the number of shares issued. In addition, Berkshire’s NetJets Inc. filed an order for approximately 120 Bombardier Inc. planes on March 2 which would result in an overall decrease in the cash account and an increase in the NetJets Inc.’s capital assets with respect to the total value of the ordered planes. Moreover, as time passes, the accumulated amortization account would increase due to the annual depreciation of the company’s capital assets such as the Bombardier Inc. planes.
Reflection:
From my perspective, I believe that Berkshire’s acquisition of Lubrizol Corp is definitely beneficial Berkshire. Not only can Berkshire reduce its fuel and lubricant expenses for its current investments in transportations which include cars, trucks, freight railroads, and even jets, it can also take advantage of the increasing demand for engine lubricants and fuel as shipping of goods increase around the world. However, despite the recent increase of 27% in Lubrizol’s share value after the acquisition, the likelihood of dividends distribution by Berkshire towards the end of the year is highly unlikely. Berkshire has a reputation of conserving cash dividends; in fact, Berkshire has not authorized a dividend to its shareholders since 1967. Personally, I would not invest into Berkshire due to the minute profit, high share price value, and the lack of dividends. Despite the large scaled acquisition of Lubrizol, the second largest acquisition the recent decade by Berkshire, the reduction of $9 billion in the company’s cash flow should not affect the company’s day to day operation since the company is in possession of approximately $40 billion cash. With the excess reservoir of cash, Berkshire can continue to invest into what it seems beneficial to both the company and shareholders. However, Berkshire should conserve a portion of its cash for emergencies, investment failures, or future economic crisis.
Tuesday, January 18, 2011
Intel and Nvidia Announce Settlement
http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid=366052
Summary:
After a disagreement with regards to a prior licensing pact between Intel and Nvidia which allowed Nvidia to produce chipsets that are compatible with Intel’s processor. However recently, Intel settled the legal dispute and formed a new cross-licensing deal with Nvidia through an agreement to pay $1.5 billion over the next five years. Despite having to pay $1.5 billion, Intel has now limited Nvidia’s access to some of Intel’s microprocessor patents, which are sufficient to prevent Nvidia from further making chipsets for Intel’s processors. Nevertheless, the access to Intel’s technology will certainly benefit Nvidia’s “Project Denver”, an initiative with ARM to develop an ARM-based CPU to contend the x86 CPU’s from Intel and AMD.
Connection:
The legal dispute mentioned in this article is an example of an unusual or infrequent event described in Chapter 3. In order to settle the legal dispute, Intel decided to pay $1.5 billion to Nvidia. Technically speaking, the $1.5 billion cross-licensing fee can be classified as an operating expense since Intel is implementing Nvidia's products as a part of Intel's CPUs. However, due to the rarity of this event, Intel has to record the $1.5 billion fee under the losses from unusual or infrequent events section in the multi step income statement. As a result, the $1.5 billion licensing fee will be entered in the multi-step income statement as a negative value to reduce the net income.
Reflection:
From my perspective, I believe that Intel's decision to settle the legal dispute with a $1.5 billion cross-licensing fee is a strategic decision. This fee allows Intel to implement Nvidia's graphic cards into their CPUs and blocks the Nvidia's access to some of its advanced technologies. Also, by settling with a cross-licensing fee during the early stages of Nvidia's "Denver Project", Intel's CPU technology will be one step ahead of Nvidia and still maintain its quality by implementing Nvidia's high quality graphic cards into their CPU. Even though the cross-licensing with Nvidia is only effective for the another 5 years, Intel have many options during those 5 years to plan whether they should develop its own graphic cards, cooperate with another graphic cards supplier, or even continue the cross-licensing with Nvidia.
Summary:
After a disagreement with regards to a prior licensing pact between Intel and Nvidia which allowed Nvidia to produce chipsets that are compatible with Intel’s processor. However recently, Intel settled the legal dispute and formed a new cross-licensing deal with Nvidia through an agreement to pay $1.5 billion over the next five years. Despite having to pay $1.5 billion, Intel has now limited Nvidia’s access to some of Intel’s microprocessor patents, which are sufficient to prevent Nvidia from further making chipsets for Intel’s processors. Nevertheless, the access to Intel’s technology will certainly benefit Nvidia’s “Project Denver”, an initiative with ARM to develop an ARM-based CPU to contend the x86 CPU’s from Intel and AMD.
Connection:
The legal dispute mentioned in this article is an example of an unusual or infrequent event described in Chapter 3. In order to settle the legal dispute, Intel decided to pay $1.5 billion to Nvidia. Technically speaking, the $1.5 billion cross-licensing fee can be classified as an operating expense since Intel is implementing Nvidia's products as a part of Intel's CPUs. However, due to the rarity of this event, Intel has to record the $1.5 billion fee under the losses from unusual or infrequent events section in the multi step income statement. As a result, the $1.5 billion licensing fee will be entered in the multi-step income statement as a negative value to reduce the net income.
Reflection:
From my perspective, I believe that Intel's decision to settle the legal dispute with a $1.5 billion cross-licensing fee is a strategic decision. This fee allows Intel to implement Nvidia's graphic cards into their CPUs and blocks the Nvidia's access to some of its advanced technologies. Also, by settling with a cross-licensing fee during the early stages of Nvidia's "Denver Project", Intel's CPU technology will be one step ahead of Nvidia and still maintain its quality by implementing Nvidia's high quality graphic cards into their CPU. Even though the cross-licensing with Nvidia is only effective for the another 5 years, Intel have many options during those 5 years to plan whether they should develop its own graphic cards, cooperate with another graphic cards supplier, or even continue the cross-licensing with Nvidia.
Thursday, November 4, 2010
Rogers shares dip on earnings miss
Article: http://www.financialpost.com/Rogers+shares+earnings+miss/3727012/story.html
Summary:
According to Rogers Communications Inc.’s recent third quarter results, their shares fell more than 7% and a drop of 24% in profit. Not only had their shares dropped, they also missed the analysts’ expectations by $60-million. Although Rogers had increases in its adjusted operating profit from its cable operations and media lines, this increase was offset by a 3% decline in wireless. The slight decline in wireless network margins is a result of the significant increase in smartphone activations and upgrades. With the recent acquisition of some of the advanced phones in the mobile market, Rogers cost of equipment sales rose 25% and its marketing and sales expenses rose 13%. Due to the recent large upgrade cycle for iPhone customers, Rogers did not adjust their guidance figures because the iPhone 4 launch heavily weighed on margins. Even though there was a modest decline in wireless network margin, Rogers still managed to distribute significant amount of dividend and share buy backs.
Connection:
Rogers recent massive upgrade and activation of new mobiles heavily impacted the figures on their financial statements, especially the income statement which deals with revenue and expenses in particular. The upgrades and activations caused various expense accounts to increase, which includes the cost of goods sold (cost of equipment sales) and marketing expense. However, the inflated expenses also brought in more revenue as there are high demands for these newly anticipated mobiles. In addition, amortization expense also plays a role in this upgrade cycle. As updated mobiles pour into the inventory, the older versions must be depreciated to a reasonable value to attract consumers and make room for the new mobiles. Despite the increase in revenue, the wireless network profit margin ratio declined 3% from the previous year because the sudden upgrades and activations were overwhelming in comparison to the revenue generated. Aside from the income statement, the balance sheet is also affected by the return of dividend and share buybacks. After a series of voting by the board of directors and an official date of declaration is set, the dividends figure becomes a liability on the balance sheet under the dividends declared account to satisfy GAAP. Also, a decrease in retained earnings is followed in order to keep the accounting equation balanced.
Reflection:
I'm optimistic toward Rogers' upcoming fourth quarter results. I believe that the insubstantial decline in the wireless network margin is merely a result of the abrupt upgrades and activations of the new mobiles. The overwhelming expenses utilized to upgrade mobiles and to market the new mobiles is most accountable for the decline in margin. This is like renovating a restaurant and upgrading the quality and variety of the food to inflate the prices on the menu. Although there may not be any profit during the beginning stages after the upgrade because the revenue generated is insufficient to offset the upgrade expneses. However, in the long run, the revenue will eventually cover the upgrade expenses and therefore, increase the profit margin. Same concept applies to Rogers recent upgrades and activations, the profit margin will ultimately increase in the long run. Not to mention, the holiday season is fast approaching which will inflate the sales of mobiles.
Comment link:
Summary:
According to Rogers Communications Inc.’s recent third quarter results, their shares fell more than 7% and a drop of 24% in profit. Not only had their shares dropped, they also missed the analysts’ expectations by $60-million. Although Rogers had increases in its adjusted operating profit from its cable operations and media lines, this increase was offset by a 3% decline in wireless. The slight decline in wireless network margins is a result of the significant increase in smartphone activations and upgrades. With the recent acquisition of some of the advanced phones in the mobile market, Rogers cost of equipment sales rose 25% and its marketing and sales expenses rose 13%. Due to the recent large upgrade cycle for iPhone customers, Rogers did not adjust their guidance figures because the iPhone 4 launch heavily weighed on margins. Even though there was a modest decline in wireless network margin, Rogers still managed to distribute significant amount of dividend and share buy backs.
Connection:
Rogers recent massive upgrade and activation of new mobiles heavily impacted the figures on their financial statements, especially the income statement which deals with revenue and expenses in particular. The upgrades and activations caused various expense accounts to increase, which includes the cost of goods sold (cost of equipment sales) and marketing expense. However, the inflated expenses also brought in more revenue as there are high demands for these newly anticipated mobiles. In addition, amortization expense also plays a role in this upgrade cycle. As updated mobiles pour into the inventory, the older versions must be depreciated to a reasonable value to attract consumers and make room for the new mobiles. Despite the increase in revenue, the wireless network profit margin ratio declined 3% from the previous year because the sudden upgrades and activations were overwhelming in comparison to the revenue generated. Aside from the income statement, the balance sheet is also affected by the return of dividend and share buybacks. After a series of voting by the board of directors and an official date of declaration is set, the dividends figure becomes a liability on the balance sheet under the dividends declared account to satisfy GAAP. Also, a decrease in retained earnings is followed in order to keep the accounting equation balanced.
Reflection:
I'm optimistic toward Rogers' upcoming fourth quarter results. I believe that the insubstantial decline in the wireless network margin is merely a result of the abrupt upgrades and activations of the new mobiles. The overwhelming expenses utilized to upgrade mobiles and to market the new mobiles is most accountable for the decline in margin. This is like renovating a restaurant and upgrading the quality and variety of the food to inflate the prices on the menu. Although there may not be any profit during the beginning stages after the upgrade because the revenue generated is insufficient to offset the upgrade expneses. However, in the long run, the revenue will eventually cover the upgrade expenses and therefore, increase the profit margin. Same concept applies to Rogers recent upgrades and activations, the profit margin will ultimately increase in the long run. Not to mention, the holiday season is fast approaching which will inflate the sales of mobiles.
Comment link:
Monday, September 20, 2010
Target plots 200-store push into Canada
Target plots 200-store push into Canada
Summary:
Target Corp. recently discussed the possibility of opening up to 200 stores in the Canadian market at a Toronto shopping centre trade show. Trailing behind Wal-Mart as the second-largest mass merchant in the USA, Target is looking to open six to 10 stores in late 2014 or 2015. This is the first time ever representatives from Target attended the trade show which is an huge indication of Target's intention to invest in Canada. To start off, Target is looking for an urban strategy beginning with the Greater Toronto Area. According to Amy Reilly, a Target spokeswoman, Target is “exploring opportunities in Canada,” and they “are optimistic that [their] first stores could open by mid-decade.” Despite the opening of a couple of hundred units which could potentially change retail in Canada, Canadian retailers have been consistently outperforming the U.S. counterparts since the recession ended without the notice of U.S. retailers.
Connection:
Target’s optimistic intention to seek opportunities in the Canadian retail market is closely associated with the investing activities. According to the investing activities in Chapter 1, Target must acquire things that will enable it to carry out the activities for which it was created. Target's intended expansion is considered as an investment because revenue will be generated after the purchase of properties and the sale of products exactly like the operating Target retails in USA. Also, Target must include financial statements as it is a public traded corporation to illustrate that they're capable of expanding its retail over the border. By informing Target's investors or potential investors of their strong financial position, Target could potentially cause an increase in its share value. On the other hand, if Target have insufficient cash flow based on the cash flow statements, it can analyze its balance of assets and liabilities through the balance sheet to request a mortgage. Another option to increase the cash flow would be issuing more shares. Although the financial statements can aid the internal users in making a decision and analyze their capabilities, it cannot predict the profitability of an investment.
Reflection:
With the semi-dominance of Target in the United States, it is an easy task to open another 200 stores in Canada. However, the retail market in Canada may be different than those in the states. Although statistics have shown that retailers in Canada are in fact outperforming those in the states since the recession, the same thing may not apply to the future Target stores. Despite the usefulness of financial statements, it will not aid Target's management team in predicting the future revenue and the success of Target. Target must find a way to offset its expenses of opening stores by attracting customers from other retails through either price or quality. Target could also analyze and compare how other successful Canadian retails, such as Wal-mart, run their business. Also, with the opening of approximately 300 stores in the next decade, the prices of products may well fluctuate and potentially eliminate the minor retailers in Canada due to the increase of competition in the retail market.
Comment Link: Ryan's blog
Summary:
Target Corp. recently discussed the possibility of opening up to 200 stores in the Canadian market at a Toronto shopping centre trade show. Trailing behind Wal-Mart as the second-largest mass merchant in the USA, Target is looking to open six to 10 stores in late 2014 or 2015. This is the first time ever representatives from Target attended the trade show which is an huge indication of Target's intention to invest in Canada. To start off, Target is looking for an urban strategy beginning with the Greater Toronto Area. According to Amy Reilly, a Target spokeswoman, Target is “exploring opportunities in Canada,” and they “are optimistic that [their] first stores could open by mid-decade.” Despite the opening of a couple of hundred units which could potentially change retail in Canada, Canadian retailers have been consistently outperforming the U.S. counterparts since the recession ended without the notice of U.S. retailers.
Connection:
Target’s optimistic intention to seek opportunities in the Canadian retail market is closely associated with the investing activities. According to the investing activities in Chapter 1, Target must acquire things that will enable it to carry out the activities for which it was created. Target's intended expansion is considered as an investment because revenue will be generated after the purchase of properties and the sale of products exactly like the operating Target retails in USA. Also, Target must include financial statements as it is a public traded corporation to illustrate that they're capable of expanding its retail over the border. By informing Target's investors or potential investors of their strong financial position, Target could potentially cause an increase in its share value. On the other hand, if Target have insufficient cash flow based on the cash flow statements, it can analyze its balance of assets and liabilities through the balance sheet to request a mortgage. Another option to increase the cash flow would be issuing more shares. Although the financial statements can aid the internal users in making a decision and analyze their capabilities, it cannot predict the profitability of an investment.
Reflection:
With the semi-dominance of Target in the United States, it is an easy task to open another 200 stores in Canada. However, the retail market in Canada may be different than those in the states. Although statistics have shown that retailers in Canada are in fact outperforming those in the states since the recession, the same thing may not apply to the future Target stores. Despite the usefulness of financial statements, it will not aid Target's management team in predicting the future revenue and the success of Target. Target must find a way to offset its expenses of opening stores by attracting customers from other retails through either price or quality. Target could also analyze and compare how other successful Canadian retails, such as Wal-mart, run their business. Also, with the opening of approximately 300 stores in the next decade, the prices of products may well fluctuate and potentially eliminate the minor retailers in Canada due to the increase of competition in the retail market.
Comment Link: Ryan's blog
Friday, April 30, 2010
B.C. has lowest minimum wage in Canada
http://www.cbc.ca/canada/british-columbia/story/2009/09/01/bc-lowest-minimum-wage.html
http://www.policynote.ca/bcs-minimum-wage-is-now-22-lower-than-ontarios/
Summary:
When New Brunswick officially raised its minimum wage to $8.25 an hour, British Columbia has claimed the honour to be the province with the lowest minimum wage in Canada. Not to mention British Columbia is one of the 3 provinces in Canada that pays training wages to first-time employees. Approximately 60,000 people in B.C. earned $8 per hour last year and nearly 300,000 people earned less than $10 per hour, which is below the poverty line. When compared to Ontario’s minimum wage, B.C.’s $8 minimum is 22% lower than Ontario’s, which means B.C.’s workers are earning one fifth less than the workers of Ontario. Despite the effort contributed by many people such as the B.C. Federation of Labour, the NDPs and many more to raise the minimum wage to a reasonable price, they were all turned down by the government. Ever since Premier Gordon Campbell and the Liberal government took over, they have frozen the minimum wage for about 9 years, the longest wage freeze in Canada followed by a two year freeze by Nunavut. The only excuse they had was that the raising of minimum wage will hurt the businesses and will reduce job opportunities for the young people and contrarily, Premier Gordon Campbell doubled his own salary over the 8 year wage freeze.
Connection:
British Columbia’s minimum wage connects to Chapter 16.1 where it talks about wages. By definition, wages are payments to workers for their labour, on an hourly, daily, or weekly basis, or by the piece. Based on the numbers of workers paid by wages from the article, we can assume that a major population of BC workers are paid by wages. Minimum wage is set as a standard for employers to pay its employees. Since the economy changes over time as a result of inflation and many other factors, minimum wage have to be adjusted to a reasonable amount to ensure that workers are able to afford basic necessities such as shelter and food. Although this may be beneficial for many workers in BC, it could cause problems for the accountants working with payroll expenses. Accountants and accounting softwares would have to adapt to the changes. New software updates must be made and would have to spend some time adapting to new tax deduction figures.
Reflection:
With British Columbia being one of the most expensive provinces to live in Canada, I believe that the minimum wage should be increased. Although the increase of minimum wage will cause an increase in a business’s payroll expenses, it will not dramatically affect the business’s performance. However, considering that the businesses in all the other provinces in Canada did not cause many problems, the businesses in B.C. should not have problems with the increase in minimum wage. Ontario is an excellent example of a prosperous province similar to B.C, but with a difference of $2.25 (22% more) in minimum wage. B.C is well known for the most expensive housing prices in Canada and yet it has the lowest minimum wage across Canada. How does the government expect B.C. citizens especially immigrants to afford a shelter, one of the basic needs, while working for $8 an hour? As a future part-time job worker, I strongly believe the minimum wage of B.C. should be increased.
Comment: Dickson's Blog
http://www.policynote.ca/bcs-minimum-wage-is-now-22-lower-than-ontarios/
Summary:
When New Brunswick officially raised its minimum wage to $8.25 an hour, British Columbia has claimed the honour to be the province with the lowest minimum wage in Canada. Not to mention British Columbia is one of the 3 provinces in Canada that pays training wages to first-time employees. Approximately 60,000 people in B.C. earned $8 per hour last year and nearly 300,000 people earned less than $10 per hour, which is below the poverty line. When compared to Ontario’s minimum wage, B.C.’s $8 minimum is 22% lower than Ontario’s, which means B.C.’s workers are earning one fifth less than the workers of Ontario. Despite the effort contributed by many people such as the B.C. Federation of Labour, the NDPs and many more to raise the minimum wage to a reasonable price, they were all turned down by the government. Ever since Premier Gordon Campbell and the Liberal government took over, they have frozen the minimum wage for about 9 years, the longest wage freeze in Canada followed by a two year freeze by Nunavut. The only excuse they had was that the raising of minimum wage will hurt the businesses and will reduce job opportunities for the young people and contrarily, Premier Gordon Campbell doubled his own salary over the 8 year wage freeze.
Connection:
British Columbia’s minimum wage connects to Chapter 16.1 where it talks about wages. By definition, wages are payments to workers for their labour, on an hourly, daily, or weekly basis, or by the piece. Based on the numbers of workers paid by wages from the article, we can assume that a major population of BC workers are paid by wages. Minimum wage is set as a standard for employers to pay its employees. Since the economy changes over time as a result of inflation and many other factors, minimum wage have to be adjusted to a reasonable amount to ensure that workers are able to afford basic necessities such as shelter and food. Although this may be beneficial for many workers in BC, it could cause problems for the accountants working with payroll expenses. Accountants and accounting softwares would have to adapt to the changes. New software updates must be made and would have to spend some time adapting to new tax deduction figures.
Reflection:
With British Columbia being one of the most expensive provinces to live in Canada, I believe that the minimum wage should be increased. Although the increase of minimum wage will cause an increase in a business’s payroll expenses, it will not dramatically affect the business’s performance. However, considering that the businesses in all the other provinces in Canada did not cause many problems, the businesses in B.C. should not have problems with the increase in minimum wage. Ontario is an excellent example of a prosperous province similar to B.C, but with a difference of $2.25 (22% more) in minimum wage. B.C is well known for the most expensive housing prices in Canada and yet it has the lowest minimum wage across Canada. How does the government expect B.C. citizens especially immigrants to afford a shelter, one of the basic needs, while working for $8 an hour? As a future part-time job worker, I strongly believe the minimum wage of B.C. should be increased.
Comment: Dickson's Blog
Monday, April 12, 2010
Canadian Tire goes back to future
http://www.thestar.com/business/article/791930--canadian-tire-goes-back-to-future
Summary:
Canadian Tire decided to return its focus in the automotive parts and services. They have devised a three-to-five year strategic plan by sharply focusing on its automotive segment and core retail. By doing so, Canadian Tire may boost its shareholders’ return on equity through drenching more profit and sales from its current 479 stores and the impending 11 new stores this year. Canadian Tire aims to increase 3%-5% in sales, 8%-10% in profit and 10%-12% in return on equity to shareholders. Along with the new stores, Canadian Tire has arranged a deal with the province to open its first 23 Canadian Tire gas stations on the 400 series of provincial highways. Also, Canadian Tire is currently reformatting its store layouts which will increase the storage space and make it more efficient for its customer’s to shop. With all these changes taking place, Canadian Tire stated that it can achieve its targets without further increasing its capital expenditures.
Connection:
This article ties in closely with the simple small ratios in chapter 15.3 and to be more precise, the rate of return on equity and the rate of return on net sales. The actions taken by Canadian Tire all share the common focus, to increase the rate of return on net sales and the rate of return on owner’s equity. By increasing the sales, profit and the return on equity to shareholders, Canadian Tire can automatically increase the rate of return on net sales and owner’s equity. Since these two ratios are vital to the outsiders when it comes to analyzing a company’s financial health, Canadian Tire must maintain and increase these ratios in order to impress the outsiders.
Reflection:
From my perspective, I believe Canadian Tire is taking the correct actions by putting its customers and investors as its priority. If I was an investor and I was told that Canadian Tire will increase its rate of return on equity to shareholders, I would be interested to invest into Canadian Tire because there’s a high chance of dividend. The increase of the two ratios can also raise the value of the stock as it can prove to the outsiders that the company is performing well. I strongly believe that Canadian Tire will have an optimistic future if it can achieve its goals.
Summary:
Canadian Tire decided to return its focus in the automotive parts and services. They have devised a three-to-five year strategic plan by sharply focusing on its automotive segment and core retail. By doing so, Canadian Tire may boost its shareholders’ return on equity through drenching more profit and sales from its current 479 stores and the impending 11 new stores this year. Canadian Tire aims to increase 3%-5% in sales, 8%-10% in profit and 10%-12% in return on equity to shareholders. Along with the new stores, Canadian Tire has arranged a deal with the province to open its first 23 Canadian Tire gas stations on the 400 series of provincial highways. Also, Canadian Tire is currently reformatting its store layouts which will increase the storage space and make it more efficient for its customer’s to shop. With all these changes taking place, Canadian Tire stated that it can achieve its targets without further increasing its capital expenditures.
Connection:
This article ties in closely with the simple small ratios in chapter 15.3 and to be more precise, the rate of return on equity and the rate of return on net sales. The actions taken by Canadian Tire all share the common focus, to increase the rate of return on net sales and the rate of return on owner’s equity. By increasing the sales, profit and the return on equity to shareholders, Canadian Tire can automatically increase the rate of return on net sales and owner’s equity. Since these two ratios are vital to the outsiders when it comes to analyzing a company’s financial health, Canadian Tire must maintain and increase these ratios in order to impress the outsiders.
Reflection:
From my perspective, I believe Canadian Tire is taking the correct actions by putting its customers and investors as its priority. If I was an investor and I was told that Canadian Tire will increase its rate of return on equity to shareholders, I would be interested to invest into Canadian Tire because there’s a high chance of dividend. The increase of the two ratios can also raise the value of the stock as it can prove to the outsiders that the company is performing well. I strongly believe that Canadian Tire will have an optimistic future if it can achieve its goals.
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