My last and final blog for Accounting 12.
General Motors and Chrysler, the two large automakers in the U.S., is given a second chance by the U.S. and the Canadian government to develop a much better restructuring plan for their company. U.S. President Barack Obama is willing to lend $6 million to Chrysler, as they have requested, only if a transfer agreement with European automaker Fiat be agreed upon within 30 days, and GM is given enough working capital if they come up with a reasonable proposal within two months period to sustain their company. Barack Obama thinks U.S. needs a change, as well as saying that the U.S. needs to “confront our (U.S.) problems head-on and do what’s necessary to solve them”. This restructuring plan of the two automakers applies with the Canadian government but we would be lending smaller amounts of money with the same dead line. For Chrysler, they also need to deal with the Canadian Auto Workers union along with their agreement with Fiat. The purpose of Canada investing in the two companies is so that we can maintain a 20 per cent production share within the auto making industry.
As a wrap up of everything I learned this year in Accounting 12, I realise this article relates to how companies need sufficient working capitals to maintain their company, how companies need to sell their merchandise so that they don’t accumulate inventory (making it hard to make a profit), as well as, how investors should be very careful in investing into companies like GM and Chrysler. Careful investors should be comparing financial data between 2 companies or even all the companies within that industry. By comparing financial data of 2 companies, it would allow a better decision to be made. Also, the inventory cycle should be on going from year to year, but it seems like GM and Chrysler aren’t selling their vehicles like what they should be doing. This will cause them to decrease in production of new models and even need to pay more storage space to store all the unsold cars.
Not long ago, GM and Chrysler had their chance to restructure their companies, but they still haven’t figured out a proper plan to save it. To me, GM and Chrysler cars aren’t as fuel efficient compared to other countries automaker, as well as, not having an up-to-date model coming out each year. They are lacking and are falling behind other countries automakers. The automaker Ford was also one of the companies who needed restructuring within their company, but they managed to survive their crucial period. It seems like GM and Chrysler needs some proper management skills within their company and should stop slacking off. This should be a valuable lesson for the two companies who think they can rely on the government support, but actually they now have to suffer for their actions.
http://www.cbc.ca/money/story/2009/03/30/auto-restructuring.html
Sunday, April 5, 2009
Saturday, March 14, 2009
Chapter 16 - Payroll Accounting
Alcoa to slice 15% off payroll costs at Quebec plants
With the hard hit economy, Alcoa Inc., the largest U.S. aluminum producers, is one of those companies who are having a hard time making a profit due to the drop in prices of lightweight metal. Their Canadian non-union salary employees might be affected by the 15% cut to their payroll so that the company can conserve some cash. Alcoa know that it is “part of managing through the downturn and focusing on cash”. The company needs money in hand to keep the company going because their most recent financial statements have shown a net loss of the company.
This article is related to our chapter 16 about payroll accounting because this article is dealing with the payroll cost to their employees on a regular basis over a period of time. The company’s payroll department needs to consider and go through so many laws and regulations before they actually decrease the wages of their employees. They have a large role to play. Also, the workers are earning a non-union salary which means they should be paid a fixed sum of money, for the salary part, but since it is a non-union salary, the company has the ability to changing their employee’s salary amount.
I believe that Alcoa is a considerate company. At least, they considered only reducing their payroll by 15% and not laying them off or firing them. It is good to know that the employees still have a job so that they have some sort of finance that is supporting them. As we all know, employees are in desperate need in keeping their jobs secure so I believe they wouldn’t mind having a 15% deduction to their salary. I think a 15% decrease to my salary would be horrifying but I would have to accept the fact that I might not even receive a pay check at all.
courtesy of: http://www.nationalpost.com/story.html?id=1353771
With the hard hit economy, Alcoa Inc., the largest U.S. aluminum producers, is one of those companies who are having a hard time making a profit due to the drop in prices of lightweight metal. Their Canadian non-union salary employees might be affected by the 15% cut to their payroll so that the company can conserve some cash. Alcoa know that it is “part of managing through the downturn and focusing on cash”. The company needs money in hand to keep the company going because their most recent financial statements have shown a net loss of the company.
This article is related to our chapter 16 about payroll accounting because this article is dealing with the payroll cost to their employees on a regular basis over a period of time. The company’s payroll department needs to consider and go through so many laws and regulations before they actually decrease the wages of their employees. They have a large role to play. Also, the workers are earning a non-union salary which means they should be paid a fixed sum of money, for the salary part, but since it is a non-union salary, the company has the ability to changing their employee’s salary amount.
I believe that Alcoa is a considerate company. At least, they considered only reducing their payroll by 15% and not laying them off or firing them. It is good to know that the employees still have a job so that they have some sort of finance that is supporting them. As we all know, employees are in desperate need in keeping their jobs secure so I believe they wouldn’t mind having a 15% deduction to their salary. I think a 15% decrease to my salary would be horrifying but I would have to accept the fact that I might not even receive a pay check at all.
courtesy of: http://www.nationalpost.com/story.html?id=1353771
Tuesday, March 3, 2009
Chapter 15 - Analyzing Financial Statements
Steady as she goes for Canada's top banks
The economic crisis is slowly catching up on Canada’s top five banks. Even though Banks in Canada are steadily earning profit, there is still a show in increase of bad loans and investment losses. With the stocks plunging to its lowest of this week, the banks still has strong domestic retail franchises to back them up for them to earn a profit. There is more for the banks to bear when they anticipate the arrival of a recession. This would then increase the loan losses which will lead to lost in assets. Banks are depending on Canadian consumers to consumer more to help ease the economy, just like in the past.
Later in the article, it compares two banks, BMO and Bank of Nova Scotia, to show how the bank industry is going. For example, they compare Bank of Nova Scotia has a flat income of $842 million, or 80¢ /share; and BMO has a drop in net income of 12% to $ 225 million, or 96¢/share. By comparing two different banks together, we can use comparative data such as comparative balance sheets and income statements to help manage, improve, and predict what should be done in the future. By using this method, insiders and outsiders can compare different banks to see which one they should invest in. The topic of comparative data is learned in section 15.2.
I can understand many people are scared to leave their money in banks since there might be a chance of the bank going bankrupt. Due to the current poor economy, many people in the world would not spend as much money compared to last year, but this is why our economy is getting worst. It is because no one wants to spend their money. It is a hard time for many to go through, but to up roar the economy to get it running smoothly again, it would take many people’s effort to achieve it.
http://www.financialpost.com/news-sectors/financials/story.html?id=1348121
The economic crisis is slowly catching up on Canada’s top five banks. Even though Banks in Canada are steadily earning profit, there is still a show in increase of bad loans and investment losses. With the stocks plunging to its lowest of this week, the banks still has strong domestic retail franchises to back them up for them to earn a profit. There is more for the banks to bear when they anticipate the arrival of a recession. This would then increase the loan losses which will lead to lost in assets. Banks are depending on Canadian consumers to consumer more to help ease the economy, just like in the past.
Later in the article, it compares two banks, BMO and Bank of Nova Scotia, to show how the bank industry is going. For example, they compare Bank of Nova Scotia has a flat income of $842 million, or 80¢ /share; and BMO has a drop in net income of 12% to $ 225 million, or 96¢/share. By comparing two different banks together, we can use comparative data such as comparative balance sheets and income statements to help manage, improve, and predict what should be done in the future. By using this method, insiders and outsiders can compare different banks to see which one they should invest in. The topic of comparative data is learned in section 15.2.
I can understand many people are scared to leave their money in banks since there might be a chance of the bank going bankrupt. Due to the current poor economy, many people in the world would not spend as much money compared to last year, but this is why our economy is getting worst. It is because no one wants to spend their money. It is a hard time for many to go through, but to up roar the economy to get it running smoothly again, it would take many people’s effort to achieve it.
http://www.financialpost.com/news-sectors/financials/story.html?id=1348121
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