http://www.vancouversun.com/business/fp/money/face+debt/3143925/story.html
Summary:
This article talks about a trend that seems to be a fast growing problem. It is apparent that more and more seniors are beginning to face financial problems. With living standards rising, prices have risen and costs are piling up, yet income has not increased enough to match. And along with debts, even if they are good debts, financial problems are becoming more common for people in their golden ages. Baby Bloomers faced strong economic growth and adopted the idea that saving isn't too neccesary, but as these baby bloomers are growing old at the same time, problems are rising. Another factor in causing this problem is the trend to retire early while living a long life.
Connection:
This article relates to chapter 6 as it talks about bad debt expenses. Many people in the Baby Bloomers era felt as if the economy was going to give them financial security. Bad loans such as high interest loans for recreational purposes are rising to the surface as concern. Stretched out mortgage payments are seeing the effects and many of these factors result in a lack of financial security for the aging population. A positive example in this is shown in the article as a couple did not loan money for anything after one was made for their house. Good use of credit and long-term stable investing also helped them smoothen out the bump that is bulging for many people going into their golden years.
Reflection:
Long-term planning has always been a priority for couples as well as singles. But things may not always go as planned. But by decreasing unneccesary expenses, you increase the chance of having financial security in times when relaxing is the best option for health issues. Compound interest needs to be exploited at an early age to maximize its benefits. I think that you can never have too much savings as later on in your life, you will need it. We need to be smart in creating expenses so that it does not cause a problem in our future. Shortening mortgages may be difficult but it can be one of the most effective ways in security financial stability in our futures.
Saturday, June 19, 2010
Chapter 5 Blog
http://www.rupeetimes.com/news/personal_loan/sufficient_liquidity_still_seen_by_sbi_despite_3g_tax_cash_outflow_3664.html
Summary:
This article explains that there is enough liquidity in the system of the State Bank of India so that they do not have to increase interest rates in the short term. Even though the largest lender in India will see cash outflow of Rs 70,000 crore (which is aproximately 15 billion US dollars), they believe that there is sufficient liquidity. The chair man of the State Bank of India, O P Bhatt said that "on an average, there is still a fair amount of liquidity in the system. The large amount of cash outflow is going towards account of payments to be made to telecom companies. Although the liquidity in the system is relatively stable, the bank has repriced some categories of loans. It raised short-term corporate loans by 25-50 points, said Bhatt. The bank has also reported a decline in net profit in the fourth quarter.
Connection:
Chapter 5 is generally about cash outflow, liquidity, and cash flow statements. This article talks about how the State Bank of India, the largest lender in India, does not need to increase interest rates in the short term. This relates to chapter 5 in that even though there is a huge amount of cash outflow, the bank is able to balance its liquidity so that drastic action is not needed. The bank is about have a cash outflow of around 20 billion by mid June yet "there is enough liquidity in the system" so that interest rates do not have to be increased just yet.
Reflection:
While increasing interest rates can easily increase cash inflow in the short term, it may be bad longterm as many borrowers may seek an alternative lender to borrow from. There is always competition in this market and customers would of course seek to find the best deal. Increasing interest rates may increase the amount of cash earned from a transaction, but it will also reduce transactions which may decrease the bank's reputation. Especially as the largest lender in India, increasing interest rates may cause a small upstir and force borrowers to find another source of cash.
Summary:
This article explains that there is enough liquidity in the system of the State Bank of India so that they do not have to increase interest rates in the short term. Even though the largest lender in India will see cash outflow of Rs 70,000 crore (which is aproximately 15 billion US dollars), they believe that there is sufficient liquidity. The chair man of the State Bank of India, O P Bhatt said that "on an average, there is still a fair amount of liquidity in the system. The large amount of cash outflow is going towards account of payments to be made to telecom companies. Although the liquidity in the system is relatively stable, the bank has repriced some categories of loans. It raised short-term corporate loans by 25-50 points, said Bhatt. The bank has also reported a decline in net profit in the fourth quarter.
Connection:
Chapter 5 is generally about cash outflow, liquidity, and cash flow statements. This article talks about how the State Bank of India, the largest lender in India, does not need to increase interest rates in the short term. This relates to chapter 5 in that even though there is a huge amount of cash outflow, the bank is able to balance its liquidity so that drastic action is not needed. The bank is about have a cash outflow of around 20 billion by mid June yet "there is enough liquidity in the system" so that interest rates do not have to be increased just yet.
Reflection:
While increasing interest rates can easily increase cash inflow in the short term, it may be bad longterm as many borrowers may seek an alternative lender to borrow from. There is always competition in this market and customers would of course seek to find the best deal. Increasing interest rates may increase the amount of cash earned from a transaction, but it will also reduce transactions which may decrease the bank's reputation. Especially as the largest lender in India, increasing interest rates may cause a small upstir and force borrowers to find another source of cash.
Friday, March 5, 2010
Delay in Revenue Recognition Causes Drop in Stock
http://www.reuters.com/article/idUSTRE62322R20100304?type=globalMarketsNews
Summary
This article is about Ciena, a telecommunications network equipment maker, whose stock dropped 7% on Thursday, March 4th, because delayed revenue recognition caused the posting of a "wider-than-expected loss". The article quotes the company saying that it is expected because of some technical problems in revenue recognition that made expectations to not be met. The company expects that the stock will go back up soon. Although the company has not make an estimate in the upcoming quarter, they believe that it will be higher because the revenue in the previous quarter will now carry over. The article then talks about the company's decision to buy a unit of Nortel Networks Corps and wraps it up displaying the numbers of the drop in the stock price.
Connection
This article relates to chapter 4 in that it talks about how the delayed recognition of revenue can affect a company. A small delay that made the first quarter less successful quickly made the stock price drop 7%. This shows the important of revenue recognition as many shareholders and potential shareholders are looking at your quarterly results. The delay that caused the lower-than-expected results made the shareholders to react quickly. Even though the revenue will carry on to the next quarter, the average shareholder will miss that fact without sufficient research. This simply shows the important of proper revenue recognition.
Reflection
I think that even though the stock price was affected, there will be no lasting effect by this delay. Because it will simply carry on to the second quarter and make its revenue slightly more bloated than what it is, which makes up for the loss in quarter 1. Then, they will probably see a rise back in their stock. They probably don't even have to wait that long because a mere 7% drop in the stock price can be quickly adjusted and possibly even change by the very next day. However, bigger and further errors in the future in revenue recognition may shake off the faith of some of its shareholders and may be questioned for its reliability.
Summary
This article is about Ciena, a telecommunications network equipment maker, whose stock dropped 7% on Thursday, March 4th, because delayed revenue recognition caused the posting of a "wider-than-expected loss". The article quotes the company saying that it is expected because of some technical problems in revenue recognition that made expectations to not be met. The company expects that the stock will go back up soon. Although the company has not make an estimate in the upcoming quarter, they believe that it will be higher because the revenue in the previous quarter will now carry over. The article then talks about the company's decision to buy a unit of Nortel Networks Corps and wraps it up displaying the numbers of the drop in the stock price.
Connection
This article relates to chapter 4 in that it talks about how the delayed recognition of revenue can affect a company. A small delay that made the first quarter less successful quickly made the stock price drop 7%. This shows the important of revenue recognition as many shareholders and potential shareholders are looking at your quarterly results. The delay that caused the lower-than-expected results made the shareholders to react quickly. Even though the revenue will carry on to the next quarter, the average shareholder will miss that fact without sufficient research. This simply shows the important of proper revenue recognition.
Reflection
I think that even though the stock price was affected, there will be no lasting effect by this delay. Because it will simply carry on to the second quarter and make its revenue slightly more bloated than what it is, which makes up for the loss in quarter 1. Then, they will probably see a rise back in their stock. They probably don't even have to wait that long because a mere 7% drop in the stock price can be quickly adjusted and possibly even change by the very next day. However, bigger and further errors in the future in revenue recognition may shake off the faith of some of its shareholders and may be questioned for its reliability.
Costs For Events in 2010
http://www.vancouversun.com/news/Costs+securing+summits+extra+million/2638426/story.html
Summary
This article talks about the costs for events in 2010 for the Canadian Federal Govenment which are considered extraordinary expenses. The article is mainly about the extra costs that the security for the G8 and the newly expanded G20 summits would bring. It further points out the costs that are needed for the Vancouver Winter Olympics, Haiti Relief Fund, H1N1 mitigration and response activies, as well as other extraordinary events. The Federal government is racking up 179.4 million dollars in costs for security at the G8 and G20 summits which are held in Huntsville and Toronto, respectively. The original G8 summit was expanded because the organization had become the "...dominant forum in dealing with the economic crisis..." It is to be the largest security event ever held in Canada.
Connection
This article relates to chapter 3 in that it talks about some extraordinary events and their costs. There are 3 requirements for an item to be considered extraordinary. Firstly, it must be unusual- and in this case, these events do not take place monthly, or even yearly. Only the olympics has a set cycle but it is rare that it will be on your soil. Secondly, it must be infrequent- a G8 or G20 summit does not happen very often, as well as the olympics, or a pandemic. Lastly, it must not primarily be caused by a decision by someone within the company- which Canada does not have the power to do.
Reflections
As soon as Vancouver won the 2010 Olympics, the protesters were at work, complaining about how the money could be spent on better things instead of causing more debt, not to mention kicking away all the homeless people. But events like this one can bring Canada a better and faster growing future. A company, or a government, must be ready to pay for these extraordinary events because there will always be surprises and unexpected things. Security in such important events must be tight and well funded to ensure that it will not embarrass our entire nation, such as allowing a random mentally challenged man to go within 10 steps to the Vice President of the US.
Summary
This article talks about the costs for events in 2010 for the Canadian Federal Govenment which are considered extraordinary expenses. The article is mainly about the extra costs that the security for the G8 and the newly expanded G20 summits would bring. It further points out the costs that are needed for the Vancouver Winter Olympics, Haiti Relief Fund, H1N1 mitigration and response activies, as well as other extraordinary events. The Federal government is racking up 179.4 million dollars in costs for security at the G8 and G20 summits which are held in Huntsville and Toronto, respectively. The original G8 summit was expanded because the organization had become the "...dominant forum in dealing with the economic crisis..." It is to be the largest security event ever held in Canada.
Connection
This article relates to chapter 3 in that it talks about some extraordinary events and their costs. There are 3 requirements for an item to be considered extraordinary. Firstly, it must be unusual- and in this case, these events do not take place monthly, or even yearly. Only the olympics has a set cycle but it is rare that it will be on your soil. Secondly, it must be infrequent- a G8 or G20 summit does not happen very often, as well as the olympics, or a pandemic. Lastly, it must not primarily be caused by a decision by someone within the company- which Canada does not have the power to do.
Reflections
As soon as Vancouver won the 2010 Olympics, the protesters were at work, complaining about how the money could be spent on better things instead of causing more debt, not to mention kicking away all the homeless people. But events like this one can bring Canada a better and faster growing future. A company, or a government, must be ready to pay for these extraordinary events because there will always be surprises and unexpected things. Security in such important events must be tight and well funded to ensure that it will not embarrass our entire nation, such as allowing a random mentally challenged man to go within 10 steps to the Vice President of the US.
Thursday, October 29, 2009
Volkswagen Profit drops 86%; Sales Decline
http://www.bloomberg.com/apps/news?pid=20601100&sid=aEtL7LDxc_ms
Summary
This article explains how the recession is causing Volkswagen, a German car producer, to see a 86% drop in net income and a 10% sales decline to 26 billion euros. However, the number of deliveries rose 8.9 percent, which means that the marketing plan was more quantity than quality. The main reason that Volkswagen is able to see an increase in its deliveries is because of China's rising economy and large market. An analyst from Fairesearch suggested selling these stocks because the ratio between revenue and deliveries is alarming. However, Volkswagen itself believes that it will perform better than the average market . The article further describes Volkswagen’s rise in most deliveries except in Audis. Also, the CEO of Volkswagen predicts 2010 to be a tough year and global auto markets will not return to pre-recession levels for several years. However, Volkswagen is still looking to take over Porsche's carmaking operations.
Connection
This relates to chapter 2 in that sales do not necessarily mean income. As even though Volkswagen's sales and deliveries were equal or greater than the previous year, there was too much of a decrease in the production-sales ratio to see the same results in net income. Quantity of the sales were kept as high as possible to disguise themselves as less impacted by the recession. The profit margin ratio that this results in would not be attractive to potential or current stockholders. However, this rise in inventory helped raise the net liquidity which can benefit the corporation’s intentions to take over the carmaking operations of Porsche.
Reflection
I think that while this strategy may not be reflected positively towards the company, it is a good move to keep stability in the auto market. Image is important in any type of business, and the increase in unit sales can keep typical customers interested. In such a competitive market in the modern society we have today, this is priority as there are too many choices out there. The decision to buy Porsche can also help brighten their image. However, this may be a risky move if all doesn't turn out the way they want. If there is another "dip" in the global economy, Volkswagen's hands may be tied due to the lack of recent income.
Wednesday, September 16, 2009
Citigroup Shareholders Agree on Increase on Outstanding Stock
http://www.forbes.com/feeds/ap/2009/09/03/business-financials-us-citigroup-shares_6845348.html
Summary
This article reveals that the shareholders of Citigroup Inc. has agreed upon increasing the number of outstanding shares, as it is necessary to complete a debt exchange program which gives the debt holders common stock. Shareholders have also agreed upon a reverse stock split which may happen any time before June 30, 2010, which will give shareholders 7 shares swapped for each held now. The article also explains how Citigroup has been the hardest hit American bank in the recent recession. Due to this recession, Citigroup saw its stock drop 17 dollars (750%) additional to the 30 dollars it dropped in the past 2 years. Citigroup has received 45 billion dollars from the government to aid its losses of more than 300 billion dollars in risky assets. Some of the fund will also be converted to stock as part of the debt exchange program, which will give the government 34% of the stocks. This process has been completed and Citi now has 22.88 billion shares of common stock outstanding.
Connection
This article relates to Ch.1 as we can see how although shareholders do not take part in everyday decisions, they are really a part of the corporation as a whole and can help make important decisions like this one. Furthermore, we can see how shares can be altered in order to make implications work. Citigroup is a great example of a bank who has to borrow money and issuing shares in order to repay debts. They also showed how bad equities and unreliable assets may lead to future problems which are often covered behind the temporary benefits.
Reflection
As hard as American banks were hit by the recession due to unreliable loans, they are able to temporarily recover by "making" more money from within the company itself. While this can help the economy recover, I believe this may only create future problems as the money from the government is coming from printers and borrowed from other countries. Furthermore, the current situation of Citigroup and other American banks have been caused by questionable decisions to invest on assets and loans which do not have a steady future.
Summary
This article reveals that the shareholders of Citigroup Inc. has agreed upon increasing the number of outstanding shares, as it is necessary to complete a debt exchange program which gives the debt holders common stock. Shareholders have also agreed upon a reverse stock split which may happen any time before June 30, 2010, which will give shareholders 7 shares swapped for each held now. The article also explains how Citigroup has been the hardest hit American bank in the recent recession. Due to this recession, Citigroup saw its stock drop 17 dollars (750%) additional to the 30 dollars it dropped in the past 2 years. Citigroup has received 45 billion dollars from the government to aid its losses of more than 300 billion dollars in risky assets. Some of the fund will also be converted to stock as part of the debt exchange program, which will give the government 34% of the stocks. This process has been completed and Citi now has 22.88 billion shares of common stock outstanding.
Connection
This article relates to Ch.1 as we can see how although shareholders do not take part in everyday decisions, they are really a part of the corporation as a whole and can help make important decisions like this one. Furthermore, we can see how shares can be altered in order to make implications work. Citigroup is a great example of a bank who has to borrow money and issuing shares in order to repay debts. They also showed how bad equities and unreliable assets may lead to future problems which are often covered behind the temporary benefits.
Reflection
As hard as American banks were hit by the recession due to unreliable loans, they are able to temporarily recover by "making" more money from within the company itself. While this can help the economy recover, I believe this may only create future problems as the money from the government is coming from printers and borrowed from other countries. Furthermore, the current situation of Citigroup and other American banks have been caused by questionable decisions to invest on assets and loans which do not have a steady future.
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