http://www.cnbc.com/id/30901709
Summary:
Due to the recession, the auto company GM has been facing economic hardships for the past couple of months but held on readily. It had to borrow an additional $4 billion from the Canadian government on top of their previous $15.4 billion loan. It is believed that GM will be limping its way to bankruptcy in no time at all. However, there are many specialists that clarify the notion as being a way around the bush – minimizing the chances to being more in debt since the recession is hitting them hard. Either way, declaring bankruptcy would be better for the company’s financial position but wouldn’t really help much in other words.
Connection:
Chapter 6 is all about a business’ cash liquidity management associated with cash, short-term investments, and accounts. Apparently, GM does not appear to have a good liquidity position in cash management which is leading to the downfall of the company. This huge auto company will certainly be using the allowance method which recognizes the doubtful accounts that they will either not be able to pay off; or, cash that they might not receive back from other companies. This is a huge issue to their auto company because they don’t have a definite amount of cash inflow but have a constant outflow of cash. Their problem will only get worst if they don’t have a good positive cash flow which also helps the cash liquidity of the company stable.
Reflection:
GM is trying to hold on from declaring bankruptcy by the Canadian government due to its several billion dollar loans that even GM doesn’t know if they can pay it off. A company’s cash liquidity helps a company withstand harsh economic hardships if they are in need of cash. GM, for example, would only be able to prove their trust to other businesses if they can make payments in cash. Instead of putting it on accounts receivables for GM, other companies wouldn’t rely on GM paying them back. A corporation’s cash liquidity is what enhances the corporation in paying back their debts.
Article summarized by
- Jillian Mak
Monday, May 25, 2009
Saturday, April 4, 2009
Chapter 5
http://www.vancouversun.com/business/fp/Canadian+banks+cash+cachet/1462001/story.html
Summary:
With an amazing competitive market out there, American consumers and business customers are losing their trust in the American banks of United States. They are feeling a sense of concern for their own banks and decide to open newly admitted accounts in Canadian-owned banks, instead. Apparently, Americans believe in Canada's strong financial shapes compared with the United States. This opportunity leads Canadian Banks with a more diversified customer environment. Royal Bank RBC, BMO Bank of Montreal, and TD Canada Trust wants to take a surge in bank deposits, demand for loans, and other banking options. However, customers are already swarming these banks for a safer financial system compared with the American banks.
Connection:
This chapter deeply resides with the cash flow statements and how relevant cash flow is to businesses, no matter whether they are huge corporations or small businesses. As for the banks, they are constantly seeking for "Line of Credits" to issue to customers. This loan arrangement is beneficial to banks because it requires such a high interest rate for customers. It is significant to families with financial needs to have access to a bit more cash to maintain their family's financial position. These normal day-to-day operating activities within a bank may also accumulate profit as the cash flow statements are being completed for the fiscal period.
Reflection:
Many companies are desperate into maintaining their financial positions during this time of the year - the recession. However, there are many who fail in achieving their goals as they struggle to make decisions on enhancing their company's finances. American banks are no exception. Customers from the United States are loosing their trust for their nation's local banks and walking away from them. This leads Canadian banks with great benefits from this financial crisis. Also, this leaves American banks out of control as they are continuously losing customers due to the unhealthy U.S. financial system. In other words, this kind of causes the U.S. with a massive destruction of economic recession without any other paths to reconsider.
Summary:
With an amazing competitive market out there, American consumers and business customers are losing their trust in the American banks of United States. They are feeling a sense of concern for their own banks and decide to open newly admitted accounts in Canadian-owned banks, instead. Apparently, Americans believe in Canada's strong financial shapes compared with the United States. This opportunity leads Canadian Banks with a more diversified customer environment. Royal Bank RBC, BMO Bank of Montreal, and TD Canada Trust wants to take a surge in bank deposits, demand for loans, and other banking options. However, customers are already swarming these banks for a safer financial system compared with the American banks.
Connection:
This chapter deeply resides with the cash flow statements and how relevant cash flow is to businesses, no matter whether they are huge corporations or small businesses. As for the banks, they are constantly seeking for "Line of Credits" to issue to customers. This loan arrangement is beneficial to banks because it requires such a high interest rate for customers. It is significant to families with financial needs to have access to a bit more cash to maintain their family's financial position. These normal day-to-day operating activities within a bank may also accumulate profit as the cash flow statements are being completed for the fiscal period.
Reflection:
Many companies are desperate into maintaining their financial positions during this time of the year - the recession. However, there are many who fail in achieving their goals as they struggle to make decisions on enhancing their company's finances. American banks are no exception. Customers from the United States are loosing their trust for their nation's local banks and walking away from them. This leads Canadian banks with great benefits from this financial crisis. Also, this leaves American banks out of control as they are continuously losing customers due to the unhealthy U.S. financial system. In other words, this kind of causes the U.S. with a massive destruction of economic recession without any other paths to reconsider.
Monday, February 16, 2009
Chapter 4
http://www.financialpost.com/trading_desk/financials/story.html?id=1171778
Summary:
Canada’s fourth largest bank, BMO Bank of Montréal, just recently purchased the world’s largest insurance company – AIG’s Canadian Life Insurance Unit. It acquired the company with an all-cash transaction of $375 million CAD. AIG was required to pay back the loans from the U.S federal government with an amount of $60 billion US dollars. BMO saw the purchase as a source to expand, strengthen the business’ financial plans, and increase client relationships. Also, the business deal will certainly benefit BMO’s revenue by opening the doors to a variety of customers and enhancing the bank’s earnings. Without a doubt, the BMO has strategically purchased AIG Life of Canada at a perfect timing with a fairly low cost.
Connection:
Chapter 4 focuses highly on Revenue Recognition with the GAAP code and criteria. Businesses strive to keep their company from bankruptcy by continually earning revenue throughout their accounting cycle and recording it into the financial statements. Only the businesses with new and fresh strategies are able to successfully continue their business without being afraid of closing down. Similar to BMO’s earnings with additional accounts and customers, they must recognize the revenue they encounter by verifying it onto the financial statements. Also, the purchase of AIG Life of Canada clarifies the Return on Investment Ratio (ROI) which declares the Performance Measurement of the business.
Reflection:
I think BMO took a mountain load off AIG’s shoulders as they acquired the company with an all-cash transaction. It is fairly beneficial to BMO’s new line of business for financial plans and increasing customers. As a matter of fact, I think BMO made a smart move when they decided to buy AIG Life of Canada. This way, the bank will be able to strengthen their financial position and achieve access to many supplementary customers. Also, AIG couldn’t maintain their expenses at low costs with high revenue which indicates their unsuccessful business strategies. It was impossible for AIG to survive without the help of BMO’s cash flowing into the company.
Article Summarized by
- Jillian Mak
Summary:
Canada’s fourth largest bank, BMO Bank of Montréal, just recently purchased the world’s largest insurance company – AIG’s Canadian Life Insurance Unit. It acquired the company with an all-cash transaction of $375 million CAD. AIG was required to pay back the loans from the U.S federal government with an amount of $60 billion US dollars. BMO saw the purchase as a source to expand, strengthen the business’ financial plans, and increase client relationships. Also, the business deal will certainly benefit BMO’s revenue by opening the doors to a variety of customers and enhancing the bank’s earnings. Without a doubt, the BMO has strategically purchased AIG Life of Canada at a perfect timing with a fairly low cost.
Connection:
Chapter 4 focuses highly on Revenue Recognition with the GAAP code and criteria. Businesses strive to keep their company from bankruptcy by continually earning revenue throughout their accounting cycle and recording it into the financial statements. Only the businesses with new and fresh strategies are able to successfully continue their business without being afraid of closing down. Similar to BMO’s earnings with additional accounts and customers, they must recognize the revenue they encounter by verifying it onto the financial statements. Also, the purchase of AIG Life of Canada clarifies the Return on Investment Ratio (ROI) which declares the Performance Measurement of the business.
Reflection:
I think BMO took a mountain load off AIG’s shoulders as they acquired the company with an all-cash transaction. It is fairly beneficial to BMO’s new line of business for financial plans and increasing customers. As a matter of fact, I think BMO made a smart move when they decided to buy AIG Life of Canada. This way, the bank will be able to strengthen their financial position and achieve access to many supplementary customers. Also, AIG couldn’t maintain their expenses at low costs with high revenue which indicates their unsuccessful business strategies. It was impossible for AIG to survive without the help of BMO’s cash flowing into the company.
Article Summarized by
- Jillian Mak
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