Link: http://www.canada.com/Business/Disney+parks+cutting+jobs+seeking+efficiencies/1444407/story.html
Summary:
Due to consequences of the economic recession, The Walt Disney Company has cut great numbers of workers. As statistics show, Walt Disney chooses to cut a sky-rocking number of 450 job opportunity. By doing so, It causes even more poverty and unemployment to the country. In fact, this is a great example of positive feedback, which is ironically pulling us into a deeper hole of the economical downfall trap. As stated, Michael Griffin claims that further elimination of different positions will initiate because they crave to maximize profit. In February of 2009, Walt Disney has experienced a dramatic decline of 24% drop in quarterly operating income and a 4% drop in revenue in the first fiscal quarter. This is ultimately due to slower consumer spending, which is greatly influenced by the current recession. During this time of year, it is understandable that consumers choose not to spend as much.
Connections:
As unlikely as it seems, this article has a lot to do with our accounting curriculum, in truth. For one thing, the ultimate goal for any profit is to maximize revenue and minimize expenses. Now, Walt Disney is doing exactly what they should be doing. By cutting down their employees, they are simply minimizing their expenses. Also, they are also playing it safe by preventing themselves to operate under large amounts of borrowed money. Realizing that using anything over one-third as leverage is considered a bad idea, they choose to reduce the number of their employees instead. For another, as said on the summary paragraph, Walt Disney has experienced a dramatic decline in their net income. In a mathematical sense, it has a low rate of return on net sales. As we all know from our accounting knowledge, rate of return on net sale is equal to net income over net sale. When the company fails to produce enough sales in tickets, their rate will simply decrease. In this case, Walt Disney has decided to compensate by cutting down its employees. Doing so, its net income would increase due to less expense and so will the rate of return on net sale.
Personal Reflection:
At an age past childhood, the prosperity of Disneyland does not have an impact on me. However, being a student in the business department, decisions regarding the prosperity of a business will indeed draw my attention. In this case, Walt Disney chooses to limit their possible expenses in a cruel way. However, this is action is forced by the nature of the economy and for the benefit of the business. On the shallow side, it may seem like it is Walt Disney’s fault for the large numbers to cuts, leading hundreds of people to lose their job. However, the truth is not as obvious this time. For all entrepreneurs, the ultimate reason to start a business is to make a profit. During times like the economic depressions, businesses and corporations must do whatever it takes to maintain their profit level. Personally, I do not believe it is their fault in doing something for the benefit for their business.
- A. Tao
Block A
Wednesday, April 1, 2009
Wednesday, March 11, 2009
Chapter 16 Blog : Now the Payoff: Cashing Out
Link: http://www.vancouversun.com/Business/payoff+cashing/1339545/story.html
Summary:
Most Canadians residing in Canada are enforced to a high taxation system. As a result, they contribute to pension plans and difference varieties of tax shelters, such as RRSP for instance. As of February 28, 2008, the Canada Pension Plan has decided to pay more for those who wait till they are older to claim their pension. This is indeed a positive thing because they will have more money cashed out and will be given an opportunity to live a more pleasure life after countless years of working in Canada under the taxation system. Adding on to the positive, employers no longer deduct a set amount from your payroll for your set pension. Instead, they start to pay you a regular amount instead. As a result, it is clear that this new change is meant to benefit us in all.
Connections:
As we may or may not notice, this change in the Canadian Pension Plan is considered a kind of payroll deduction, in truth. Every employee hired in Canada is enforced to a certain deduction after their gross pay. For example, tax and the Canadian Pension Plan are great examples today. These calculations are to be recorded in special journals and to be kept on file for record-keeping. As explained in depth in the text book, the payroll equation is stated as gross pay – deductions = net pay. As the deduction decreases, the net pay will increase because there is less to subtract. Since net pay is defined as the amount of pay remaining after all deduction, it becomes quite clear that this new change in the Canadian Pension Plan is indeed beneficial.
Personal Reflection:
In my opinion, this change in the Canadian Pension Plan should be initiated in an earlier time. Employees in Canada are subjected to a rather high percentage of tax in comparison to other countries in the world. The tax rate in Canada ironically draws approximately one-third of the gross pay. Due to this high amount, the government of Canada should compensate by providing some sort of payment in return. The improvement in pension serves a great example of the desired compensation. But on the positive side, the money submitted as tax also provides us with many social and health benefits. The high tax rate allows us to receive free medical care and up to secondary school education. Weighing out the positives and negatives, it is really difficult to say that the high percentage in taxation system is a good or bad thing. But however, one thing is for sure: the change in the Canadian Pension Plan is will be appreciated by all the employees in the work force today.
- A. Tao
Block A
Summary:
Most Canadians residing in Canada are enforced to a high taxation system. As a result, they contribute to pension plans and difference varieties of tax shelters, such as RRSP for instance. As of February 28, 2008, the Canada Pension Plan has decided to pay more for those who wait till they are older to claim their pension. This is indeed a positive thing because they will have more money cashed out and will be given an opportunity to live a more pleasure life after countless years of working in Canada under the taxation system. Adding on to the positive, employers no longer deduct a set amount from your payroll for your set pension. Instead, they start to pay you a regular amount instead. As a result, it is clear that this new change is meant to benefit us in all.
Connections:
As we may or may not notice, this change in the Canadian Pension Plan is considered a kind of payroll deduction, in truth. Every employee hired in Canada is enforced to a certain deduction after their gross pay. For example, tax and the Canadian Pension Plan are great examples today. These calculations are to be recorded in special journals and to be kept on file for record-keeping. As explained in depth in the text book, the payroll equation is stated as gross pay – deductions = net pay. As the deduction decreases, the net pay will increase because there is less to subtract. Since net pay is defined as the amount of pay remaining after all deduction, it becomes quite clear that this new change in the Canadian Pension Plan is indeed beneficial.
Personal Reflection:
In my opinion, this change in the Canadian Pension Plan should be initiated in an earlier time. Employees in Canada are subjected to a rather high percentage of tax in comparison to other countries in the world. The tax rate in Canada ironically draws approximately one-third of the gross pay. Due to this high amount, the government of Canada should compensate by providing some sort of payment in return. The improvement in pension serves a great example of the desired compensation. But on the positive side, the money submitted as tax also provides us with many social and health benefits. The high tax rate allows us to receive free medical care and up to secondary school education. Weighing out the positives and negatives, it is really difficult to say that the high percentage in taxation system is a good or bad thing. But however, one thing is for sure: the change in the Canadian Pension Plan is will be appreciated by all the employees in the work force today.
- A. Tao
Block A
Monday, March 2, 2009
Chapter 15 Blog : Maintaining the Flow of Cash in Banks
Link: http://www.vancouversun.com/business/fp/Canadian+banks+keeping+money+moving/1319205/story.html
Summary:
As we may or may not know, the activities done by the bank these days are adding to the severity to our current recession. Because our economy is slowly declining, many people would go to the bank for a loan. Taking advantage in this rare opportunity, the banks require higher interest rate on loans and more secure mortgages, in order to make the most profit out of customers. The reason for this approach is to safely guarantee that the money lent out will be paid back in full. For those who fail to pay off their loan, the bank would experience a less serious loss by collecting more interest during the period of their loan. As the vice president of commercial banking, David Pinsonneault claims, "we want to diligently serve our clients and take advantage of opportunities." This action ironically causes banks to be blamed for the meltdown of the financial markets in the world. For one thing, it causes hardship for those who are under a loan. For another, it makes lowers the wealth of our economy, greatly weakening the financial portion of the country. Under such circumstances, it is certainly debatable as to the fact whether the “safe” approaches done by the bank are right.
Connections:
As learned from section 15.1 in our textbook, there are two types of users of financial statements for a company – the insiders and the outsiders. The insiders of a company are its owner and executive and management groups and the outsiders are bankers and other creditors, prospective investors and shareholders. Being one of the major outsiders, bankers ultimately look for the company’s ability to pay the loan. To break that down, they specifically look for the net income figure and the assets that could be cashed from their financial statements. This is exactly the case in this article. If a company is well-prospering, the bank would offer a lower interest rate because they are quite certain that they will get their money back. On the other hand, in an economic recession, this is not the case. Due to the uncertainly of whether the money lent out will be gone forever, bankers tries to protect the bank by demanding a higher interest rate when lending out a loan. Even though this safely approach appears to be rather beneficial for the bank, it is dramatically adding to the severity of the current recession.
Personal Reflection:
As a student in the business department, I strongly believe that the bank should not bare any blame for the economic recession or financial meltdown, as said in the article. For one thing, this approach only protects them from experiencing any form of loss. Since the ultimate goal in every business is to make a profit, it is reasonable for the bank to do anything prevent any net loss for their company. It is not logical to purposely favour the customer and save the economy by purposely losing money in their business, in essence. Accordingly, the bank would also compensate by offering a lower interest rate in those putting their money in the bank. Even though it is true to a certain degree that their actions are declining the economy, I personally believe it is not their fault and they should not bare any form of blame or criticism by economists.
- A. Tao
Block A
Summary:
As we may or may not know, the activities done by the bank these days are adding to the severity to our current recession. Because our economy is slowly declining, many people would go to the bank for a loan. Taking advantage in this rare opportunity, the banks require higher interest rate on loans and more secure mortgages, in order to make the most profit out of customers. The reason for this approach is to safely guarantee that the money lent out will be paid back in full. For those who fail to pay off their loan, the bank would experience a less serious loss by collecting more interest during the period of their loan. As the vice president of commercial banking, David Pinsonneault claims, "we want to diligently serve our clients and take advantage of opportunities." This action ironically causes banks to be blamed for the meltdown of the financial markets in the world. For one thing, it causes hardship for those who are under a loan. For another, it makes lowers the wealth of our economy, greatly weakening the financial portion of the country. Under such circumstances, it is certainly debatable as to the fact whether the “safe” approaches done by the bank are right.
Connections:
As learned from section 15.1 in our textbook, there are two types of users of financial statements for a company – the insiders and the outsiders. The insiders of a company are its owner and executive and management groups and the outsiders are bankers and other creditors, prospective investors and shareholders. Being one of the major outsiders, bankers ultimately look for the company’s ability to pay the loan. To break that down, they specifically look for the net income figure and the assets that could be cashed from their financial statements. This is exactly the case in this article. If a company is well-prospering, the bank would offer a lower interest rate because they are quite certain that they will get their money back. On the other hand, in an economic recession, this is not the case. Due to the uncertainly of whether the money lent out will be gone forever, bankers tries to protect the bank by demanding a higher interest rate when lending out a loan. Even though this safely approach appears to be rather beneficial for the bank, it is dramatically adding to the severity of the current recession.
Personal Reflection:
As a student in the business department, I strongly believe that the bank should not bare any blame for the economic recession or financial meltdown, as said in the article. For one thing, this approach only protects them from experiencing any form of loss. Since the ultimate goal in every business is to make a profit, it is reasonable for the bank to do anything prevent any net loss for their company. It is not logical to purposely favour the customer and save the economy by purposely losing money in their business, in essence. Accordingly, the bank would also compensate by offering a lower interest rate in those putting their money in the bank. Even though it is true to a certain degree that their actions are declining the economy, I personally believe it is not their fault and they should not bare any form of blame or criticism by economists.
- A. Tao
Block A
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