Wal-Mart posts flat 2nd-quarter profit; boosts outlook as it benefits from cost-cutting

Summary

This article revolves around Wal-Mart’s and its sales revenue. Wal-Mart Stores Inc. managed to maintain an unchanged income during the harsh economic recession. Compared to the Wall Street analysis, Wal-Mart actually did better than expected. Wal-Mart maintained its revenue through a process of cost cutting in both its inventory and expenses. Adjustments were made in the store layout to persuade the consumers away from its rivals. They lowered the shelves to broaden the view of the store from the entrance and installed better lightings and wider aisles. In addition, Wal-Mart added more brands and extended its electronics offerings. Wal-Mart is planning to spend around $1.6-$1.7billion dollars to redo up to 600 stores to persuade the new customers.

Connection

As stated in Chapter 11 of Accounting 12, an excess inventory slows down the inventory cycle, takes up room, and reduces the amount of cash flow in the business. Wal-Mart discovers this problem and immediately made adjustments to its inventory. This increased the amount of cash flow in the business for better investments and also increases the storage space in the business. As a result of better inventory management and cost-cutting, Wal-Mart was able to improve its profit margins and reduced the revenue loss in an economic recession. As you can see, an excess inventory can be a burden for a company’s financial health.

Reflection

Once again Wal-Mart showed its ability to maintain a healthy business. Wal-Mart did what they were supposed to do to prevent the business from further revenue loss. Although the cost cutting was not specifically explained, we can assume from its previous reputations. Wal-Mart has the reputation of treating its employees poorly and applying pressure on its suppliers to lower the price. They probably lay off many of its employees just like all the other businesses during the recession. Another perspective of laying off employees is that it will continue to worsen the recession and reducing the consumers spending in the long run.

http://abcnews.go.com/US/WireStory?id=8317384&page=1

http://abcnews.go.com/US/WireStory?id=8317384&page=2

Intuit Inc buying Mint.com for $170M

Summary:

This article is mainly about Intuit Inc. who decided to purchase an online personal finance website, Mint.com, for $170 million. Intuit Inc. sees this transaction as a beneficial and defensive move for the business. This website (Mint software) organizes the users’ bank accounts all in one place and provide ways to analyze the users’ spending and investments. Simultaneously, Mint recommends other financial service companies to its 1.4 million users in return for a charged fee. Both Intuit Inc. and Mint will benefit from this transaction. Intuit Inc. will further strengthen its position as a leading provider of consumer SaaS (Software as a Service) offerings with profits in the process and on the other hand, Mint can acquire a large portion of Intuit Inc.’s original users.

Connection:

The connection between the article and accounting is the new and improved accounting software. These software not only helps inexperienced individuals to do simple accounting, but they also make accounting easier for accountants. In the past, accountants have to spend countless hours calculating financial information like mortgages for the customers. Now with the aid of these software, accountants can simply punch in a few values and a few clicks and the results will magically show up in a blink of an eye. Software like Mint can increase the efficiency of running a business by reducing the time consumption required to organize and speed up the accounting processes.

Reflection:

In my perspective, this transaction is certainly a defensive move for Intuit Inc. By accumulating the original users of Mint and sharing its users with Mint can immensely increase the profit. I think that this is a defensive move because this transaction allows Intuit Inc to climb out of recession quicker and prevent any deficit from getting deeper. Also, considering that Intuit Inc’s loss has increased to $70million in quarter 4, Mint can play a huge role in filling up the $70million loss.

http://sanjose.bizjournals.com/sanjose/stories/2009/09/14/daily2.html