Chapter 6

Summary:

http://www.cbc.ca/canada/nova-scotia/story/2009/05/12/nb-lobster-industry-337.html

The Global Economic Crisis from last year had brought a huge change and difficulties of various industries all over the world. The Lobster Industry in New Brunswick is also being greatly affected on. Between 300 and 400 jobs have been lost in northern New Brunswick, mainly in the fish processing sector, said the executive secretary of the Maritime Fishermen's Union. The price of fish also dropped dramatically to 2.75 dollars a pound. This is exactly the lowest price in decades. The industry called an urgent meeting with the government to tell them that they need a short term investment of the government in order to lift industry up and avoid bankruptcies. However, the government has no plans for immediate financial assistance of the industry.

Connections:

The cash, short-term investments and receivables could affect greatly on the financing and operating activities of industries. This is because they are the most liquidity assets and companies could use them when ever they want to. It helps the company to expand and keep its operation. The concept is obviously being shown in this news. The Lobster Industry in NB is experiencing a possibility of bankruptcy because of the presence Economic Crisis not long ago. Many workers in the fish processing sector have lost their jobs. The company also is experiencing the lowest price of the fish they are selling ever. The executive secretary of the Maritime Fishermen's Union was hoping that the government could make a short – term investment in the company in order to pull it out of the difficulty, or at least help it out of bankruptcy.

Reflection:

The Economic Crisis has a long – term affect all over the world. Even though the crisis was being caused by America, it is not the only victim of the crisis. Canada has a very close bond with America in economics before, and after the Great Depression toke place after WWII, Canada had been carefully grows independent from America. Even though the Economic Crisis in America has not affected Canada as deeply as the Great Depression, it still has an effect on Canada’s industries. The Canadian government would surely want to help the industries. But the question is, do they have the money to help? Are they, themselves being involved in the Economic Crisis? Can they save themselves? If they do have the money, why would they refuse to make a assistance for the Lobster Industry?

Chapter 5 (Accounting News)

http://www.forbes.com/feeds/afx/2009/04/06/afx6257611.html

Summary:
GM's Saab will seek to write off three quarter of its unpriorited debt inorder to boost its cash flow statement to make a positive amount by the year 2011. The news basically talked about the company had several meetings and tried to find out the solution to boost its cash flow. The company wishes that based on written off the debts, they will have a positve cash flow by the year 2011 and also have a great amount production of cars in return.

Connections:
The Cash Flow Statement theory had provided us that if a company's amount of cash flow is greater than the amount of Income Statement, then we will consider the company's earnings to be of high quality. But if the cash flow is less than the net income, we consider the earnings to be low quality. Based from this theory, we could easyly tell how imporant the cash flow statement is for a company's operating system; even more imporant than the revenues itself sometimes. Maybe from this point you are wondering what a Cash Flow or a Cash Flow Statement is. The definition text book gave us is: the net change in cash that occurs from the beginning of an accounting period to the end of the period. And the cash flow statement must go at the similar rate with the income statement, if not, the company might be losing money or have a low quality earning. The news "GM's Saab seeks debt write-down to boost cash flow" showed us how hard the company had tried to boost its cash flow. The company's operting, financing and investigating rate all goes with the cash flow statement. The court-appointed aministrator of GM's Saab had clearly stated out that the company will seek to write off 3 quarters of unpriorited debt inorder to boost its cash flow, and of course, make the company in a better level.

Reflection:
It is very imporant for a company in Financing Crisis time to get a positive cash flow statement. But it is very hard and risky to make decision that will shift its cash flow. The company had found a solution to boost its cash flow, even though we are not that sure by now if the method is really going to work. I personally think it is a great decision that the company made. Their decision might be wrong, but at least they tried. They already had a negative cash flow and a little more lossing won't change much. But if they are successful of their new method, they could have a high earning quality. They could make better products, make more money from it, and becoming better will be the trend of the company in the future.

Chapter 4 (Accouting news)

http://www.localnews8.com/Global/story.asp?S=9857664&nav=menu554_1_1

Summery:

This is a news about the State lawmaker need to cut another $320 million from their budget. This means they could predict that their revenue keep decreasing. The revenue of the state will be decreased by $171 million from the current fiscal year, and also, $320 million from the fiscal year that begins at July 1.

And Gov. Jon Huntsman's also stated that their budget will keep decreasing by $900 million from last year; the lawmakers also decided to cut every state agency's budget by about 15%.




Connection:

This news shows a clear relationship with the Economy Depression in America. As an result of the Economy Depression, America could not make enough income in order to keep the country work well. Many workers lost their jobs. This leads the society to a disaster such as: companies don't have enough people to work for it, many factories could not continue to operate. Many schools and community centres got closed. Children could not get the education they should get, people could not have a healthy exercise at the community centre.




Reflection:

The dramatic decreasing of the state budget also is another example of the Economic Depression in America. From December of 2008. America's economy kept sliding down. The caused many inconveniences for the people. Many workers lost their job; some school, factories and shops even got closed. The decline in America's economy also caused a world wide affect. In China, many new graduates (even with a master degree) could not find job. Many workers had lost their jobs. Many houses could not be sold, and many companies went bankrupted. This is a serious problem and as the news state out, if the state continue to go down hill, it will went into a disaster eventually.

Chapter 3

http://www.marketwatch.com/news/story/Qiao-Xing-Universal-Telephone-Inc/story.aspx?guid=%7B88C6EC20-1D23-4A82-8347-2B88F34DAF82%7D

Summery:

This is news basically about how the net profit of Xiao Qing Universal Telephone, Inc in China had dropped dramatically from the year 2007 to 2008. The net non-operating income for the company n 2007 was 11.9 million, compared to 524.0 million in the same period of 2007, represents a decrease of 512.1 million. Xiao Qing Universal Telephone Inc is the largest manufacturers and distributor company of telecommunication in China. It had a strong net comprised of more than 5000 retail stores throughout China, and the company also has a strong partnership with many major retailers in Europe, North America and Latin America.



Connections:

This news is one of the significant examples for Extraordinary item. Extraordinary item could be defined as a gain or loss that is unusual, infrequent and not caused primarily by a decision made by someone inside the company. No one ever thought that the Net Profit of the company would drop for more than 90% in just one year. It is unusual for this company is moving from a well processed organization to a company that is nearly bankrupted. The pace of dropping of the company is so fast that no one could believe it is happening. This is one of the reasons that it is infrequent. It could not be a decision made by someone inside the company because I don’t believe that the CEO or someone that hold professional financial managing skills could make a decision that made the company lost 90% of net profit in only one year. That is unbelievable.



Reflection:

I think the reason for the significant loss of net profit of Qiao Xing Universal Telephone Inc probably relates to the Economic Depression in America. As I mentioned before, Qiao Xing Universal Telephone Inc had a strong partnership with many retailers through out North America and Latin America. As the economy of America goes down, companies in foreign countries such as China also could go through a downfall period.

Chapter 2

Asia, Europe close ranks to ease financial crisis

http://www.guardian.co.uk/business/feedarticle/7925372

Summery:

This is news about how the Chinese government was trying to get any resources and means to help to ease its domestic financial crisis. The Chinese government already pledged about $4 trillion to help the banks and restart money markets in order to prevent deeper financing crisis in the future. The Prime Minister Hu, Jing Tao said:” We must use every means to prevent the financial crisis impacting growth of the real economy." He also said that countries need to strike a balance between innovation and regulation and between savings and consumption.



Connection:

Ruling a country’s finance is just like managing a big company. No one would know what would happen next. But still, some basic accounting rules and formulas are very important and necessary to use. The Balance Sheet format could be used by an organization as small as a company or as big as a country. Like the Prime Minister said, that the Chinese Government must strike a balance between innovation and regulation and between savings and consumption. He is right and that’s the way any managers or board of directors should rule the company, to make as many profits and use as less consumption as they could. Make the “asset” increase, the “liability” decrease in order to increase the “shareholder’s equity”. And in this case make the whole country’s equity increase.


Reflection:

Well, I believe that the Chinese economy will rise in a fast pace for the Prime Minister Hu used the right method the manage it. He is trying his best to save money for the country. He established money markets for security and also to make more profits in the future. He reduced the expenses and consumption of the country as much as possible. I think that China is in a huge financial crisis right now probably has the Olympic as part of its reason. China spent a lot of money and also manpower in building the “Bird Nest”. The biggest and the most comfort stadium in China and also the world. I hope that Prime Minister Hu would realize after this event that save more money for the country’s own use is much more important than have a huge and fantastic Olympic Opening Ceremony.

Chapter 1 (news)

AIG Falls on Prospect of Federal Takeover, Curbs on Dividends
By Hugh Son and Erik Holm

Sept. 17 (Bloomberg) -- American International Group Inc. lost 44 percent of its remaining value in early trading after investors learned that the U.S. rescue will curb the insurer's dividends and wipe out most of their stake.
AIG fell $1.66 to $2.09 as of 9:17 a.m. in New York. The U.S. plan to save the New York-based company, the nation's largest insurer by assets, may give the government an 80 percent stake in return for an $85 billion loan, and dividends may be halted to common and preferred stockholders. They're already reeling from a 94 percent drop in the common shares this year.
The ``punitive'' interest rate on the two-year loan ``makes it extremely clear that this is not a subsidy extended to keep the company afloat but rather a stranglehold that makes AIG unviable while ensuring that its obligations will be met,'' said Marco Annunziata, an analyst at UniCredit SpA, in a note to clients. ``This is to all extents and purposes a controlled bankruptcy.''
AIG unraveled as the worst housing crisis since the Great Depression led to more than $18 billion of losses in the past year. A meltdown could have cost the financial industry $180 billion, according to RBC Capital Markets, because AIG provided insurance on more than $441 billion of fixed-income investments held by the world's biggest institutions, including $57.8 billion in securities tied to subprime mortgages.
The U.S. reversed its opposition to a bailout of AIG, after private efforts collapsed and the Federal Reserve concluded that ``a disorderly failure of AIG could add to already significant levels of financial market fragility,'' according to a Fed statement late yesterday.
``It's an enormous relief,'' said David Havens, credit analyst for UBS AG in Stamford, Connecticut. ``Nobody really knows what it would have meant if they would have been allowed to fail, but there was an enormous amount of systemic risk. The problem was, nobody really knew how bad it could have been.''
To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.
Last Updated: September 17, 2008 09:25 EDT

Summary:

AIG is at the downfall part of it’s business. The company couldn’t keep operating and its stock value dropped from $3.75 to $2.09 in September 17. This company created another depression period for the US citizens other than the one in 1920s. The US government is trying to save this New-York based company by lending them $85 billion loan. And in return they wanted 80% of the government’s profits. They also halted the dividends to the shareholders.

Comment of this news:

The sad thing with business is that almost everybody is saving themselves when they meet troubles, even the government. AIG is in a low condition right now that they couldn’t get enough money to keep operation. The government lend them $85 billion for rescue. But in return they wanted an 80% stake. The business also halted the dividends that were supposed to be given to the shareholders. In my personal opinion that is extremely unfair. They are the one who invested in the business and operates it. In other word, without them the business couldn’t even get started. But at the end they can not get what they were supposed to be getting. The government didn’t finance, operate or invest in the business, but at the end they get most of its profits.

Reflection:

Business is all about risks and smart brains. Doing a great business depends on decision making, and it is the most important issue in managing and running a business. For example the Management and Board of Directors have to decide how many shares does the company want to have? How much dollars per share? And for an insuring organization, what amount of money should they give to different levels of accidents? How much money should they collect from the selling of insurances in order to make the business profitable? These decisions could lead the business into a huge success, a non-profitable company, or such a disaster. I think AIG didn’t have a great effort today is because the wrong decision making which started by it’s biggest shareholder "Hank" Greenberg. It is said in newspaper that “he built AIG into a global behemoth during his four-decade tenure, in part by expanding into complex lines of business and insuring risk that few would dare to touch.” This wrong decision made the company went down-hill.

First time ever......

eh.....Hi!~~~