Accounting Blog

http://www.vancouversun.com/business/Vancouver+prices+fall+still+highest+Canadian+cities/1448940/story.html

Summary:
The article I read named “Vancouver gas prices fall, but still highest for Canadian cities”. The article is basely like a financial report that reports the gas prices during the last seven days. The average price of regular gasoline in Canada was 88.4 cents a liter, down 0.9 cent from a week ago. The biggest weekly rise was in Regina, where the average gasoline price went up 6.2 cents to 95.9 cents a liter. Saskatoon and Prince Alberta both saw their average prices rise 6.00 cents a liter to the same 95.9 cents in Regina. However, the lowest gas prices were in Ottawa, where the average fell 3.4 cents over the week to 79.3 cents. Both Toronto and London fell by 6.4 cents and both averaged 83.3 cents a liter. Back to Victoria and Vancouver, both their gas price edged down 0.1 cent to 0.2 cents, but compared to the rest of Canada, British Columbia still has the highest gas price.

Connection:
The connections between this article and the chapters in the book are different accounting ratios. As we known that the gasoline is a major expense in many companies. No matter big or small the companies are, if they need to transport out or in, they need to spend money on gasoline. To many large transport companies, the decreasing in gas price will make them reduce a huge portion in expenses, and all the accounting ratios that relate to the net income will also be influenced. That is because fewer expenses will make a higher net income. On the other hand, if the gas price is increasing, the expenses will also increase and this will cause the decreasing in net income. However, to some merchandisers, they only use a small amount of gasoline each month, so the up or down of gas price will not influence them by a lot.

Reflection:

Beside all the other financial reports, the gas price is another sensitive topic I cared most these days especially during economy recession. Before, I thought the gas price is like a symbol that reflects the value of Canadian dollar. From my observation, I discover when the gas price increases, the value of Canadian dollar will increase; when the gas price decreases, the value of Canadian dollar will also decrease too. It is because Canada is a natural resource county; it produces its own gas and even supplies the gas to other countries like United State. I still remember last summer when the gas price in Vancouver went up to 1.5 dollar per liter, and the exchange rate between Canadian dollar and US dollar was 1.2. However, the exchange rate now is going below 1.0, which means the US dollar is higher than Canadian dollar, and the gas price also drops. Therefore, it proves my observation is right and reasonable.

Chapter 16 Blog

http://blog.seattletimes.nwsource.com/politicsnorthwest/2009/03/12/senate_passes_unemployment_ins.html

Summary:
The article I read named “Senate passes unemployment insurance bill” on The Seattle Times talks about a second proposal impacting the state’s unemployment insurance fund, this time benefiting businesses, passed on Senate on Tuesday night. This proposal, which calls for tapping into the state’s flush unemployment insurance fund to give unemployed workers an extra $45 per week, has already been signed into law by Gov. Chris Gregoire. No doubt, this is a good news to the employee who were apply for UI right now because after March 12, 2009 they can get extra $45 more per week. This is also a good new to the employers because this will make them much more competitive since more money will stay in their pockets of, and this is an important step. By the way, the Employment Security Department has been the focus of intense attention this legislative session because of the sheer size $4 billion unemployment fund is the country’s largest unemployment insurance trust. In addition, the state’s senate also passed a measure that would offer $15 million to $30 million to community and technical colleges for worker retraining.

Connection:
The connection between this article and Chapter 16 is the unemployment insurance (UI). Unemployment insurance is a federal program whereby eligible unemployed persons receive cash benefits for a specified period. These benefits are paid out of funds derived from employer, employee and government contributions. If a worker who has made sufficient contributions to the fund becomes unemployed while willing and able to accept employment, that worker is entitled to receive payments out of the fund. In Canada, the Emplyers’ Guide to Payroll Deductions states, “Calculate the premium at 1.4 times your employee’s premium.” Therefore, the employers need to pay a large portion of UI for employees too. However, in United States right now, the bill has just passed will help both the employees and employers a lot.

Reflection:
Since the economy does not do well, the unemployed rate increases by a lot. This indicates many people were laid off and need to apply for the unemployment insurance. Of course, this fund will help many people, and family to overtake this hard time. Like United State does, I think Canadian government maybe would also want to adjust something due our unemployment insurance fund to make our workers feel easier. Nobody knows this economy depression will last for how long, and no one knows there is going to be how many more workers facing layoff; all we know right now is beside we don’t have any income, the unemployment insurance will help us continue to live.

Chapter 15 Blog

http://www.financialpost.com/story.html?id=1288720

Summary:
This time the article I read named “Telus rings up 29% drop in Q4 profit”. This article talks about the second strongest telephone company- Telus, its profit dropped 29% in the Q4 profit. That is a huge dropping since the economic does not do well. Its profit dropped as it booked fewer tax-related gains and spent more on restructuring, but revenue rose stayed as strong as usual because of the company’s wireless business. The favorable tax-related adjustments of $32 million, compared with $143 million a year earlier. On the other hand, restructuring costs increased by $32 million, however, the company froze executive compensation, reduced some expenses and cut down management layers to maintain their profits as much as they can, but the profits still dropped a lot compared to a year before. In addition, the revenue rose 5.3% to $2.45 billion, fuelled by growth in wireless subscribers and the number of new high-speed Internet customers signed by dropped 27% compared with last year. Although revenue per subscriber fallen sharply, but more customers were sign up for feature-rich smartphones, which boosts data revenue.

Connection:
Chapters 15 in our textbook talks about compare different financial statements by using accounting ratio. From calculate different accounting ratios, we can determine how well a business operates. The two ratios connect between this article and chapter 15 is the rate of return on net sales ration and collection period ration. Rate of return one net sales ratio measures the dollars that remain after all expenses are deducted from net sales. Since Telus did not do well compared to last year or last 3 quarters, its net income will decrease, which means its rate of return on net sales will also decrease. However, there are more new customers sign up for new smartphones, high –speed internet, and those will cause increasing in collection period since we know most of our telephone bill paid after the month we used. The account receivables will increase and the collection period will also increase too.

Reflection:
The economy depression made many companies suffering a lot. The financial statements will not look as good as we expected due to the hard situation right now. Many companies try their best to keep the profits at a certain point by cutting down labors or decreasing the expenses. The debt percentages may increase and the equity ration may decrease. The current ratio will also be the one to decrease since the total assets of a company is decrease; its ability to pay the debts back is weaker than before. Due to the economy environment right now, my opinion is to try the best to keep your profits as much as you can, but do not take a risk to invest at this moment. Put yourself in a safe transition period until the economy looks better.