Ford cuts debt by 38%

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.

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.

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.

Credit-card use akin to spending play money, say authors

Most often people tend to estimate their purchases on the low side of the amount. This usually occurs when people are doing their shopping with a credit card. A credit card is very dangerous when it comes to situations like these. The person will continue to rack up purchases without thinking nor caring how much it will cost at the end of the month. Because of the credit cards ability of buy now, pay later, many people will find themselves in a hole trying to pay off the balance. The article states that many teenagers are most vulnerable to be in debt from a credit card. As well, many teens will not know how much interest is added upon if they do not pay the full amount but instead will pay for minimum amount to save some spending cash.

http://www.cbc.ca/consumer/story/2008/09/08/consumer-behaviour.html

How this chapter relates to this article is the process used to make the transaction occur. When often a person swipes their credit card to make a purchase, the clerk will print out a sales slip through the imprinting device. This device prints out the customer's name and identification number on the sales slip. Then the customer will sign their name on the sales slip to verify the purchase and to allow the transaction to occur. Once that is done, the customer takes a copy of the sales slip for his/her own reference. Another relation to the chapter is how cardholders will be charged with interest on their overdue balances on their account. This is mainly how people will get in trouble with debt.

I think that this article is true in many ways, especially in the aspects of spending money. In my own experience, I felt that having cash at hand is much better than having a debit card mainly because you actually see how much you're spending. With a debit card, all you have to do is swipe it and enter your pin. This process is much easier to deal with because you don't get to see how much you're handing over to the cashier. I'm all for it with credit cards because they're very useful when you want to buy something now and pay later. But the only thing you have to be careful with is making sure that you keep track of your spending and knowing your limit before it gets out of hand.

Taking tortillas to Canadians

Axel Arvizu and Juan Manuel Roman, who have been friends since childhood, are now going to be closer than ever once they start up their business. The two friends that came from Mexico City had the idea of sharing their culture to Canadians. The business to be open will sell authentic traditional Mexican food, the tortilla. The two entrepreneurs had a hard time because they had no idea of where to start and what steps to take in order to successfully open up their business. Luckily for them, they met Brian Moreau and he introduced them to The Interactive Business Planner. The planner would help make sure that they have their plan organized and set. With their plan set, it was time for them to get their permits and license in order to run the business. On average an entrepreneur would spend about 7.5 hours searching requisite permits and licenses but Mr. Arvizu and Roman found a way to cut that time significantly. They had the help of site a called Bizpal which took them only 15 minutes to research.

http://www.financialpost.com/small_business/story.html?id=906553

When a new business just opens up, it is extremely important that it has good accountants keeping track of what journals and accounts are being affected. In the case of Mr.Arvizu and Roman, it is a food service business where they must be very well organized. This is where the Synoptic Journals come into relation with the article. Since they're selling food, they must have their supplier ship in fresh produce every couple of days or depending on how busy the store is. The transaction would be under the Purchases Journal. The way it would be recorded in the Purchases Journal is to debit purchases, debit gst recoverable, and credit accounts payable. Usually a store will pay its supplier at the end of the month with a cheque. The transaction would fall under Cash Payments Journal. Accounts payable would be debited and bank would be credited. Every transaction that has occurred must be recorded into the appropriate journal because it will be easy to look back if any errors or unbalanced accounts appear.

The accomplishment of these two childhood friends opening a business together is quite a story. I believe that this could be an inspiration for all the other young or old entrepreneurs wanting to open up their own business. The two friends in the article showed that if you have a plan, you should go out and try to finish the plan. They also talked about Bizpal, which was an online site that helped business get their licenses and permits. With Bizpal, it will save a lot of entrepreneurs a lot of time searching online to get requisites for licenses and permits. With opening your own business as an idea, I hope that I could do that when I'm older so I wont have to work for anyone but myself.

A one-stop store for auto buffs

About 20 years ago, Ted Wilkinson and his brother started up a one-stop store for everything an automotive fanatic would desire. This business was about selling vintage automotive magazines, shop manuals, clothing, but most importantly the best mint condition miniature models. Ted Wilkinson's store is one of a kind when it comes to selling old vintage items which especially attracts automotive and motorcycle enthusiasts. It would also explain his success in owning his own small business now running side by side with his wife, Lorraine White-Wilkinson. The reason for his success is not only for his store being one of a kind, but also for his love and compassion for automobiles. That was his reason for working so hard in order to make the business work. Some of the difficulties he had were finding suppliers and also there was construction which made it hard for his customers to come.

http://www.canada.com/vancouversun/news/business/story.html?id=04512417-9379-4436-9e35-27e59a63f325

The biggest connection between chapter 11 and this article would be inventory. With Ted's successful business doing $500,000 each year, it must be very difficult for him and his wife to keep track of inventory. As good as his business does, he must always be on top of his game in re-ordering inventory from his suppliers. In business, many customers want their item to be in store instead of them having to tell the manager to order it for them. This has resulted in some very loyal customers that have kept on coming back for 20 years. He also has uses the internet to benefit his business by posting up new featured items on his website. This would allow the possibility for many enthusiasts around the world to buy things online off of Ted's website. When people would order online, many accounts would have to be properly debited and credit to insure that it is a correct transaction.

Ted Wilkinson I believe has done a great job in starting and owning his own small business. I think that in order to be a good business owner, you must incorporate your passion and ideas into one big idea. That is what Ted has done. He had put together his love for automobiles and the fact that there are no other stores around like it. I think that Ted Wilkinson is a modern day entrepreneur because he is selling what many enthusiasts wants which are vintage collectible models of cars. What I also find amazing is how well his business is running with $500,000 in total sales with only 3 employees.

Higher prices siphon savings

The raise in prices for gas, food, and other necessities, people are claiming that it has taken out money of their retirement savings. The most hit part of Canada are those who are living in smaller communities. One-third of them saying that they have reduced their savings a lot, while one in five in major cities say they have. The survey shows that 49% of Canadians had to reduce their retirement savings fund due to rising food and gas prices. The survey shows that Canadians are at top with 49% just above the Americans at 45% and Britain at 43%.

http://www.financialpost.com/reports/oil-watch/story.html?id=583055

The increase of food and oil prices will result cash to loose some of its purchasing power. This has affected many Canadians as you can see in the survey. The cost of gasoline will continue and to increase and we will still be buying it because we need to it run our vehicles. Food which is a part of our necessities will increase and we can't do much about it. With the increase of products, we would have to decrease our savings in order to buy these necessities. In order to not have a huge decrease in our savings, we would need to learn how to manage our money better.

I believe with the rise in oil prices, some people would make the jump onto transit and leave their vehicles at home. Because of this, I think the government should be more involved in transit even more now because they're finalizing a Carbon Tax Law. I think a lot of people are hesitant to take transit because many people do complain that it is slow and mostly not on time. With a lot of money being poured into transit, I personally don't see any improvements in our transit system. Why can't our transit system be like Japans?