During this point in time in the North American markets, not only are large corporations at risk of financial failure, but also small businesses. One of these small businesses is Dorinha Jeans Wear, owned by Dorinha Reynolds herself. Although she only has a small business, rather than a corporation, she caused quite a stir in 2001 with her designer label, and has now decided to have a relaunch for 2009. As an entrepreneur herself, the advice she gives to other aspiring entrepreneurs is to “Get off your duff, and take a chance” and try to not think of the possible risks of failure.
http://www.canada.com/vancouversun/news/business/story.html?id=feec0f55-6f38-4f48-a669-56a030c35fd8
Because Dorinha only owns a small business, many of her transactions and bookkeeping are much less complex, when compared to a large corporation. For example, when it comes to financial statements such as income statements, she would most likely use a single step format, instead of a multistep format. This is because she does not have shareholders and board of directors, who may want to be specified on what types of revenues and expenses are made and used in a period. Although there is a small difference between the different income statements, it is important her business makes enough gross profit, in order to cover all her costs. As she continues to follow the accounting cycle, it is crucial she notices the trends her business is having, and know when it is time to lower prices, decrease wages, increase prices, make lay off, etc.
One thing that was shocking to me was the advice she gave to aspiring entrepreneurs. I agree that it is important to take some chances when starting a business, but you must have some discretion to the risks. During the beginning stages of opening a business, you do not want to put yourself in a position where you can lose almost everything you own, especially when you are not financially stable. This is especially a bad time to start a business, with this current financial crisis. She says to not procrastinate in starting a business, but at the same time, it is better to be safe than sorry.
Thursday, November 27, 2008
Monday, November 24, 2008
Economics Ch 3- Article: Pass The Plate
With all the economic turmoil of late, many problems have come up for company owners. These companies include car makers, such as General Motors, Ford, and Chrysler, all of which have asked the Senate Banking Committee to hand a possible cash bail out for each of the companies. This situation is not only happening in the US, European unions are also thinking of giving a €40 billion in soft loans to carmakers. Although Ford has stated that they may be able to scrape by and barely pay all its bills by the end of the year, this is not the situation for both GM and Chrysler, who will definitely need financial aid from the government.
http://www.economist.com/business/displaystory.cfm?story_id=12638642
Government involvement is a major issue in this situation. Although these companies are privately owned, the government can still help them be bailed out of this predicament. A bailout would be a positive effect for the carmakers, allowing them to continue producing automobiles, only at a lower rate, but is negative to its third party- the environment. If the government grants cash for the car companies, the environment will be greatly affected, because of the many more cars out there contributing to pollution; and if the government doesn't grant the money, it will be responsible for thousands of jobless American citizens- GM alone already employs over 266,000 workers around the world. They have to keep in mind however, that GM and Chrysler are not small car companies: if these two companies were to go down, Ford may also plunge in the markets, due to the fact that all three companies get their automobile parts from the same supplier.
This to me, comes as a surprise, because GM, Chrysler, and Ford are some of the largest carmakers around the world, so having them on the verge of bankruptcy is astonishing, even with the recent slumps in the market. When it comes to whether or not the government should give the companies a grant, many factors come into play. In 2007, GM lost $38.7 billion in lost profits and Chrysler $2.92 Billion, so doesn’t this seem like giving to a lost cause? The $25 billion asked by all three companies combined does not even compare to the $38.7 billion debt for GM. Although GM has played a large role in revolutionizing the automotive world, it is time they step down and allow the more popular carmakers of today to take over. The debts of Chrysler and Ford are much lower; therefore, it would be reasonable to bail out Ford and Chrysler, rather than GM
http://www.economist.com/business/displaystory.cfm?story_id=12638642
Government involvement is a major issue in this situation. Although these companies are privately owned, the government can still help them be bailed out of this predicament. A bailout would be a positive effect for the carmakers, allowing them to continue producing automobiles, only at a lower rate, but is negative to its third party- the environment. If the government grants cash for the car companies, the environment will be greatly affected, because of the many more cars out there contributing to pollution; and if the government doesn't grant the money, it will be responsible for thousands of jobless American citizens- GM alone already employs over 266,000 workers around the world. They have to keep in mind however, that GM and Chrysler are not small car companies: if these two companies were to go down, Ford may also plunge in the markets, due to the fact that all three companies get their automobile parts from the same supplier.
This to me, comes as a surprise, because GM, Chrysler, and Ford are some of the largest carmakers around the world, so having them on the verge of bankruptcy is astonishing, even with the recent slumps in the market. When it comes to whether or not the government should give the companies a grant, many factors come into play. In 2007, GM lost $38.7 billion in lost profits and Chrysler $2.92 Billion, so doesn’t this seem like giving to a lost cause? The $25 billion asked by all three companies combined does not even compare to the $38.7 billion debt for GM. Although GM has played a large role in revolutionizing the automotive world, it is time they step down and allow the more popular carmakers of today to take over. The debts of Chrysler and Ford are much lower; therefore, it would be reasonable to bail out Ford and Chrysler, rather than GM
Friday, October 17, 2008
Economics Ch 2- Article: Falling Housing Market Tough for Both Sides
With the high possibilities of a recession, the pricing for houses have gradually decreased in recent months; however, people are not quick to jump at buying a house, because predictions say that the house prices will decrease even more in the next few months. This poses as a horrible problem for home owners, such as Mike and Tonya Smith, who want to sell their house. They put their Maple Ridge house up for sale in April below its assessed value, and now, 6 months later, it is still for sale, reduced three times, at $799,900 compared to its current assessed price of $842000. Luckily for them, the house they are planning to buy has also reduced its prices, allowing them to further reduce the price of their own home right now. It is easy to say that the sale of houses in BC today is not in its brightest of times.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=ccea6e0a-1ccd-44c2-93ee-93b50adeb788
The demand for houses is currently at a very low state, while there is a plentiful supply of houses up for sale. There are two very important factors that are influencing this trend, and they both have to do with the future: the future incomes of consumers and the future prices of the houses in BC, especially in the Lower Mainland. With a recession, a worker's future income will most likely be decreased; therefore, they would spend there money more wisely, and on things that are more of a necessity, rather than luxury at the moment. The future prices of houses are also predicted to drop even lower than they are now, prompting buyers to holt their purchases, and wait until the prices are as low as possible. However, if someone is desperate to purchase a home, there are many other cheaper substitutes to buying a house; homes such as condos, apartments, and rooms for rent are much less expensive.
If I were thinking about purchasing a house, I would not want to do it at this point in time, or any time in the near future. Why buy a house now at $800000, when it may drop to $750000 three or four months from now. Whatever the assessment cost of your house is, I believe you should assume it can only be sold for a maximum of $50000 less than that amount, and probably lower as the months go by. Buying a house now will also most definitely leave you with a deficit in the future, if you plan on reselling it in the next year or so. It is a good idea to keep your finances at a good steady pace, as there may still be some surprises in the near future.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=ccea6e0a-1ccd-44c2-93ee-93b50adeb788
The demand for houses is currently at a very low state, while there is a plentiful supply of houses up for sale. There are two very important factors that are influencing this trend, and they both have to do with the future: the future incomes of consumers and the future prices of the houses in BC, especially in the Lower Mainland. With a recession, a worker's future income will most likely be decreased; therefore, they would spend there money more wisely, and on things that are more of a necessity, rather than luxury at the moment. The future prices of houses are also predicted to drop even lower than they are now, prompting buyers to holt their purchases, and wait until the prices are as low as possible. However, if someone is desperate to purchase a home, there are many other cheaper substitutes to buying a house; homes such as condos, apartments, and rooms for rent are much less expensive.
If I were thinking about purchasing a house, I would not want to do it at this point in time, or any time in the near future. Why buy a house now at $800000, when it may drop to $750000 three or four months from now. Whatever the assessment cost of your house is, I believe you should assume it can only be sold for a maximum of $50000 less than that amount, and probably lower as the months go by. Buying a house now will also most definitely leave you with a deficit in the future, if you plan on reselling it in the next year or so. It is a good idea to keep your finances at a good steady pace, as there may still be some surprises in the near future.
Thursday, October 16, 2008
Financial Accounting Ch2- Article:Small Business Owners Optimistic in Tense Times, Bank Survey Finds
Everyone, at least the ones with jobs and homes, is aware of the current possibilities of a world recession, and it is rare to find someone who is not pessimistic of the future financially; however, in this article, small business owners in BC have been surveyed, and surprisingly enough, are generally optimistic of the future. This survey enlisted the three main concerns in Canada: maintaining cash flow, managing growth in 2009, and fuel costs, all respectively in order from 1 to 3. Advice from these surveyed owners is also given, and the number one answer for starting your own business is to raise enough capital beforehand.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=6d86864a-1991-4ebe-b2de-0cf76d741760
It is said the number one concern is a decrease in cash flow; this affects the financing, investing, and operating activities of the business. Therefore, the businesses for the future are more likely to repay loans much more slowly, make less profit, buy less inventory, and purchase equipment only when it is totally essential, like when it has been completely amortized, no longer of use, and needs to be replaced, and this is all due to the fact that demand for products will probably decrease. These businesses will not have to worry about dividends or share earnings, as they are small businesses and do not have shareholders.
With all of these concerns in mind, small and big business owners will have to use their cash in a careful manner, as the cash flows of businesses in Canada are most likely to go down. There are two things in this article that come as a surprise to me: the gas prices are the 3rd most concerned about things, and the lack of concerns of the surveyed business owners. One of the few positive things to come out of this recession is a decrease in prices for products, so why would gas prices be a concern? They are now hovering around $1.2/L, which is much better compared to when the prices peaked at $1.5/L a year ago. This possibility of a recession will decrease the pricing on almost everything, which is a major problem for business owners selling inventory and services; therefore, I feel the business owners should ask a qualified professional in the finance industry on what the best thing to do is right at this moment in time.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=6d86864a-1991-4ebe-b2de-0cf76d741760
It is said the number one concern is a decrease in cash flow; this affects the financing, investing, and operating activities of the business. Therefore, the businesses for the future are more likely to repay loans much more slowly, make less profit, buy less inventory, and purchase equipment only when it is totally essential, like when it has been completely amortized, no longer of use, and needs to be replaced, and this is all due to the fact that demand for products will probably decrease. These businesses will not have to worry about dividends or share earnings, as they are small businesses and do not have shareholders.
With all of these concerns in mind, small and big business owners will have to use their cash in a careful manner, as the cash flows of businesses in Canada are most likely to go down. There are two things in this article that come as a surprise to me: the gas prices are the 3rd most concerned about things, and the lack of concerns of the surveyed business owners. One of the few positive things to come out of this recession is a decrease in prices for products, so why would gas prices be a concern? They are now hovering around $1.2/L, which is much better compared to when the prices peaked at $1.5/L a year ago. This possibility of a recession will decrease the pricing on almost everything, which is a major problem for business owners selling inventory and services; therefore, I feel the business owners should ask a qualified professional in the finance industry on what the best thing to do is right at this moment in time.
Sunday, September 21, 2008
Financial Accounting Ch1- Article: Ontario Securities Commission Bans Short-selling in Financial Stocks
It was said last Friday September 19 that the Ontario Securities Commission had decided to temporarily ban on short selling certain stocks. This temporary ban had already been put into place by many other international authorities, like Britain and the US. This ban will begin now, until October 3rd. To those who do not know what short selling stock is, it is when an investor sells a stock, which he does not own, in hopes that it will drop in value, so that he/ she can purchase it for a cheaper price.The reason for this ban is to help smoothen the inconsistency in financial markets.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=04a9ec8e-247d-4487-aabd-6ab5ade194cf
Now just because short selling is temporarily banned, it does not mean the sale and purchases of stock is not allowed: this goes for both publicly traded corporations and privately held corporations. With this in mind, financial statements and stock increases/ decreases may not be relevant to investors who run the risk of short selling. Many changes may occur from now until October 3rd, but these changes will most likely not be timely enough to help short sellers make financial decisions. After this ban, the representational faithfulness of all the international corporations will be accurate and dependable; of course, this fact does not affect private corporations as much, since financial information is not publicly presented on the newspaper.
This ban seems to be a good temporary staballizer for financial markets, but it might be pointless when it comes to a long term look at the financial markets. According to the article, there were already 800 stocks that had to be banned in the Toronto and New York stocks alone. If this rate continues after October 3rd, there may have to be a permanent ban for certain stocks. However, for many shareholders, this is a good time to take a detailed look at how well your corporation is doing; this could mean big purchases, or big sales of stocks internationally. After this ban, it will be interesting to see which corporations improve, and which ones worsen.
Link: http://www.canada.com/vancouversun/news/business/story.html?id=04a9ec8e-247d-4487-aabd-6ab5ade194cf
Now just because short selling is temporarily banned, it does not mean the sale and purchases of stock is not allowed: this goes for both publicly traded corporations and privately held corporations. With this in mind, financial statements and stock increases/ decreases may not be relevant to investors who run the risk of short selling. Many changes may occur from now until October 3rd, but these changes will most likely not be timely enough to help short sellers make financial decisions. After this ban, the representational faithfulness of all the international corporations will be accurate and dependable; of course, this fact does not affect private corporations as much, since financial information is not publicly presented on the newspaper.
This ban seems to be a good temporary staballizer for financial markets, but it might be pointless when it comes to a long term look at the financial markets. According to the article, there were already 800 stocks that had to be banned in the Toronto and New York stocks alone. If this rate continues after October 3rd, there may have to be a permanent ban for certain stocks. However, for many shareholders, this is a good time to take a detailed look at how well your corporation is doing; this could mean big purchases, or big sales of stocks internationally. After this ban, it will be interesting to see which corporations improve, and which ones worsen.
Economics Ch1- Article: Running Out of Gas
Nowadays, paying $100 of oil is relief to many customers. This is most likely from the fact that a few months ago, back in July, the price of a barrel of crude was at an ultimate high of $147, but since then has dropped by more than 25%. However, this drop in prices is disliked by The Organisation of the Petroleum Exporting Countries(OPEC). This was brought to attention when Iran and Venezeula, two members of OPEC, demanded to cut output because of the slide in oil costs. Opec decided to keep its goal of 18.8 million barrels of crude a day, but cut 1.8% of output.
Link http://www.economist.com/finance/displaystory.cfm?story_id=12209376
This article relates to the topic in many ways. Oil is clearly one of the most scarce land resources in the world, which makes it quite surprising that OPEC is not making their price rates higher, just because of the fact that oil use may decrease from some of the rich countries. Clearly, they want to find a price that would satisfy their consumers and maximize profit. The fact that OPEC is constantly experimenting with the prices and production just goes to show that economics is a science. As oil becomes more and more scarce, it is almost guaranteed that prices will increase, and output will decrease.
It is surprising to me that OPEC has not risen the prices of crude/oil, but this is also understandable as well. With so many different ways to travel, such as public transit, biking, and simply walking, there is plenty of competition for OPEC and the many other gas/oil selling companies. On the other hand, there are many consumers, like travel agencies that must buy gas and oil, no matter what the cost; this is due to the fact that their travel buses, cruise ships, and airplanes all must have fuel to take vacationers to their destinations. At the moment, these prices look very good to consumers, but for certain, they will change as soon as a month's time, because the prices for certain scarcee resources are never consistent.
Link http://www.economist.com/finance/displaystory.cfm?story_id=12209376
This article relates to the topic in many ways. Oil is clearly one of the most scarce land resources in the world, which makes it quite surprising that OPEC is not making their price rates higher, just because of the fact that oil use may decrease from some of the rich countries. Clearly, they want to find a price that would satisfy their consumers and maximize profit. The fact that OPEC is constantly experimenting with the prices and production just goes to show that economics is a science. As oil becomes more and more scarce, it is almost guaranteed that prices will increase, and output will decrease.
It is surprising to me that OPEC has not risen the prices of crude/oil, but this is also understandable as well. With so many different ways to travel, such as public transit, biking, and simply walking, there is plenty of competition for OPEC and the many other gas/oil selling companies. On the other hand, there are many consumers, like travel agencies that must buy gas and oil, no matter what the cost; this is due to the fact that their travel buses, cruise ships, and airplanes all must have fuel to take vacationers to their destinations. At the moment, these prices look very good to consumers, but for certain, they will change as soon as a month's time, because the prices for certain scarcee resources are never consistent.
Subscribe to:
Posts (Atom)