http://money.cnn.com/2009/04/06/news/companies/ford_debt.reut/index.htm?postversion=2009040612
With the automotive industry in major debt, Ford has recently cut its debt by 38%. In a financial figure, $9.9 billion dollars in debt has been eliminated from Ford's balance sheet. Having the 38% cut of debt, Ford will pay $500 million dollars less in interest expenses per year. The saved money could be invested in trying to produce more fuel efficient cars because of President Obama's new auto fuel emission standards. In the article I read about President Obama's plan, was to have passenger cars reach 6 litres/100km by 2016. Ford being able to cut its debt in a slump of the recession shows that the Ford will not shut down anytime soon. It is also a positive for other manufactures like GM and Chrysler to show that they are also able to cut their debt.
In this article, there are a few topics that stand out and have connections to our textbook. First of all, Ford has stated that it has cut its debt by 38%. In order for them to calculate that figure, the accountants of Ford must use comparative balance sheets between months and years. When they compared the balance sheets,they would most likely see a change in their accounts payable and bank loan. By the reduction of their loans to companies and banks, they would also see a decrease in their expenses, especially their interest expense. As a result, Ford's income statement might of had an increase in net income from previous months. Another connection is what Ford did in order to cut back its debt. The most obvious thing that Ford did was shut down many of its assembly plants which put a lot of employees out of work. This cut in wages and other benefits paid for their workers is now saved to pay off debt for its company. In order to keep laid off employees from going bankrupt, many are eligible for EI in which the government will give money to employees on a 2 week basis for a period of time. The money would help in paying for bills and groceries.
I think that Ford is going towards the right path to lowering their debt quicker than GM and Chrysler. Being able to cut their debt in the recession is a very good positive which I think that they should build on it. This should give Ford a very big boost in confidence and a reason to build better cars. Also that they should keep in mind when designing new cars is about President Obama's new auto fuel emissions standards. The new fuel emissions standards will save billions of barrels of oil which will significantly reduce the effect of global climate change. I hope to see that Ford will be looking to build more affordable and fuel efficient vehicles to sell to the North American market.
Monday, April 6, 2009
Tuesday, March 10, 2009
600 lose jobs at Sun Media
In the slumps of the economic recession, many companies such as Sun Media are laying off their employees. Sun Media will be close to laying off about 1,000 full time workers which is equivalent to 10% of its workforce to save payroll. In its most recent quarter, Sun Media has reported that their earnings before interest, tax, depreciation, and amortization have gone down 13% from last year. As people begin to be more “digitalized”, the newspaper industry is falling because many people are looking online for their news.
http://www.canada.com/business/fp/story.html?id=1083955
This article talks about Sun Medias employees being layed off and why it had to happen. To relate to the chapter, every paycheque that the employee receives, there is an amount of deductions taken off from their pay. There are many deductions that the employer takes off but the Unemployment Insurance Deduction will help during hard times. Only an employee may be eligible for UI is if they have made sufficient contributions to the UI fund and is unemployed. Also, they will have to be willing to accept employment if their employer decides to call them back for work.
I think that this chapter was very informative because most high school students have part time jobs during the school year. I kind of had an idea of what payroll accounting was like, but now I have a better understanding of how the figures, especially the deductions are derived from. During hard times such as this recession, many workers are layed off from their daily job which means that they might have 1 less source of income if they’re married. I really like how the deductions that we pay from every cheque will benefit us in one way or another. One example is Unemployment Insurance. When you’re laid off, you will still receive a portion of your weekly income to help with expenses from the government.
http://www.canada.com/business/fp/story.html?id=1083955
This article talks about Sun Medias employees being layed off and why it had to happen. To relate to the chapter, every paycheque that the employee receives, there is an amount of deductions taken off from their pay. There are many deductions that the employer takes off but the Unemployment Insurance Deduction will help during hard times. Only an employee may be eligible for UI is if they have made sufficient contributions to the UI fund and is unemployed. Also, they will have to be willing to accept employment if their employer decides to call them back for work.
I think that this chapter was very informative because most high school students have part time jobs during the school year. I kind of had an idea of what payroll accounting was like, but now I have a better understanding of how the figures, especially the deductions are derived from. During hard times such as this recession, many workers are layed off from their daily job which means that they might have 1 less source of income if they’re married. I really like how the deductions that we pay from every cheque will benefit us in one way or another. One example is Unemployment Insurance. When you’re laid off, you will still receive a portion of your weekly income to help with expenses from the government.
Tuesday, March 3, 2009
McDonald's is lovin' this recession
With the economy in a slump of the recession, McDonald's is doing very well. In fact, their stock is up 1% from last year because of an increase in sales. With customers holding tight on to their money, they're spending it on a McDonalds meal simply because it is cheap and quite good for its price. McDonalds also started selling "McCafes" which was a cheaper alternative than buying from Starbucks. In order to insure that many customers will return to McDonalds, they have done simple things such as allowing customers to use their credit cards. Also, many locations are open 24/7 and the drive-through is most convenient for people on the go any time of the day. The convenience factor that McDonalds has is mainly why it is doing much better than its other competitors such as Burger King and Wendys.
http://www.financialpost.com/news-sectors/story.html?id=1336727
In regards to the relation of Chapter 15, the insiders of a company are able to produce financial statements anytime of the year to evaluate the company’s performance. As the economy is in the recession, many executives, owners, and management groups of McDonalds are analyzing the financial statements very thoroughly and seeing if there are any favorable or unfavorable trends in its statements. As stated in the article, McDonalds has seen an increase in its sales and it wouldn’t have been possibly noted if it wasn’t for the Comparative Income Statement. Because it is so easy for the executives to get financial statements on a daily basis, they’re able to encourage its strengths which is what McDonalds has done. They have lowered prices and added the convenience factor to which appeals very much to its customers. For McDonalds to see how well they’re against their competitors, they would use the Common-Size Income Statement and Common-Size Balance Sheet for a side by side comparison. The figures would be changed into percentages for a much more meaningful analysis.
I think McDonalds has dealt with the recession very well by lowering their prices on food and adding some variety to their selection. As people are tight with money, it is most often that they will want to find a place to eat that is fairly cheap and most bang for their buck. They would most likely think of McDonalds because it has built up its name around the 2 qualities. Once again, their convenience factor plays a big role mainly because people might be in between 2 jobs, and the drive-through is very quick. As well, McDonalds usually sends out coupons such as “Buy one, get one free” or “2 can dine for $7.98” which takes in more customers and results in higher sale figures.
http://www.financialpost.com/news-sectors/story.html?id=1336727
In regards to the relation of Chapter 15, the insiders of a company are able to produce financial statements anytime of the year to evaluate the company’s performance. As the economy is in the recession, many executives, owners, and management groups of McDonalds are analyzing the financial statements very thoroughly and seeing if there are any favorable or unfavorable trends in its statements. As stated in the article, McDonalds has seen an increase in its sales and it wouldn’t have been possibly noted if it wasn’t for the Comparative Income Statement. Because it is so easy for the executives to get financial statements on a daily basis, they’re able to encourage its strengths which is what McDonalds has done. They have lowered prices and added the convenience factor to which appeals very much to its customers. For McDonalds to see how well they’re against their competitors, they would use the Common-Size Income Statement and Common-Size Balance Sheet for a side by side comparison. The figures would be changed into percentages for a much more meaningful analysis.
I think McDonalds has dealt with the recession very well by lowering their prices on food and adding some variety to their selection. As people are tight with money, it is most often that they will want to find a place to eat that is fairly cheap and most bang for their buck. They would most likely think of McDonalds because it has built up its name around the 2 qualities. Once again, their convenience factor plays a big role mainly because people might be in between 2 jobs, and the drive-through is very quick. As well, McDonalds usually sends out coupons such as “Buy one, get one free” or “2 can dine for $7.98” which takes in more customers and results in higher sale figures.
Subscribe to:
Posts (Atom)