The company’s net income has been unstable the past 5 years, rising to $15.48 million in 2007 from a net loss of $1.61 million the previous year. After a huge rise in net income over the course of one year in 2007, their profit started too decline before taking a huge dive to a net loss of $86.32 million in 2011. The sales amount has steadily increased and hovered over the $500 million mark the past few years. Their expenses have increased and unusual expenses have begun to accumulate since 2008. The liabilities, however, are the main concern of this near bankruptcy, rising from roughly $170 million to $250 million in 2011. The current liabilities have increased a substantial amount, from $60 million the previous year to $213 million in 2011. Current liabilities have to be repaid within a short period of time, and the company barely has enough liquid assets to pay it off. In addition to that, their cash amounts have been declining as well since 2007, dropping from $19 million to $7.66 million over the course of 4 years. Poor cash management also contributed to this decline. The company paid off roughly $65 million worth of long term debt in 2011, which likely contributed to their drop in cash.
American Apparel’s sales have been steady over the past 3 years. The company, however, has an excess of inventory, with an increase of $30 million while their sales have declined by around the same amount. The company would no longer need to purchase any inventory for the time being. American Apparel should look to invest this $14 million to marketing and operating activities to increase their sales. At the same time, the company will be able to speed up the process of obtaining a sufficient amount of cash to pay off their liabilities.
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Income&symbol=US%3aAPP&stmtView=Ann
Monday, May 2, 2011
Friday, April 8, 2011
RIM revenue, profit sharply higher
Summary
RIM earned $796.7 million in net income during their second quarter ended August 28 in 2010. The previous year, they earned $475.6 million in profit. The company added 4.5 million new Blackberry smart phone users and shipped 12.1 million devices. The revenue earned amounted to $4.62 billion, slightly better than the analyst expectations of $4.5 billion. The company is pleased with the results and the momentum of this quarter is expected to carry over as new products such as the Blackberry Torch are introduced. The company is expecting revenue amounts ranging from $5.3 billion to $5.5 billion the following quarter.
Connections
RIM earned $796.7 million in net income which is reported as an increase in the operating section in the cash flow statement. The accounts following the net income are either deducted or added to the net income to give the total amount of cash earned or lost from operating activities. RIM’s inventory certainly decreased their cash flow because of the company’s rapid growth, adding 4.5 million new users of their devices and 5.4 million new subscribers as well. With an increased amount of customers, the company would have to compensate for this growth by purchasing even more inventory. The cash on hand would therefore be decreased. This would be recorded in the operating section as a decrease in cash flow.
Reflections
This article was written around 6 months earlier. Some information I compiled from the more recent articles I found gives a better representation of the company’s performance at this point in time. RIM’s most recent quarterly report states that the company earned $934.4 million in net income, a healthy increase from the $796.7 million reported in this article around six months earlier. The Blackberry Torch was a released as RIM’s response to Apple’s iPhone back in the summer of 2010. The device however, did not fare too well against its opponent. Despite the disappointing sales of the company’s newly anticipated Blackberry Torch, the company still managed to post an increase in its net income. With that being said, RIM will be having a hard time improving their sales in the next few fiscal periods. The company’s new and heavily anticipated Playbook tablet should see a similar result as the Blackberry Torch. The Playbook will be given the daunting task to compete against Apple’s iPad 2, which already has $2.5 million sales in the month of March. RIM’s new Playbook will have a hard time competing against Apple’s popularity. RIM should look to improve on marketing to increase their success against Apple.
http://www.cbc.ca/news/business/story/2010/09/16/rim-results-quarterly.html
RIM earned $796.7 million in net income during their second quarter ended August 28 in 2010. The previous year, they earned $475.6 million in profit. The company added 4.5 million new Blackberry smart phone users and shipped 12.1 million devices. The revenue earned amounted to $4.62 billion, slightly better than the analyst expectations of $4.5 billion. The company is pleased with the results and the momentum of this quarter is expected to carry over as new products such as the Blackberry Torch are introduced. The company is expecting revenue amounts ranging from $5.3 billion to $5.5 billion the following quarter.
Connections
RIM earned $796.7 million in net income which is reported as an increase in the operating section in the cash flow statement. The accounts following the net income are either deducted or added to the net income to give the total amount of cash earned or lost from operating activities. RIM’s inventory certainly decreased their cash flow because of the company’s rapid growth, adding 4.5 million new users of their devices and 5.4 million new subscribers as well. With an increased amount of customers, the company would have to compensate for this growth by purchasing even more inventory. The cash on hand would therefore be decreased. This would be recorded in the operating section as a decrease in cash flow.
Reflections
This article was written around 6 months earlier. Some information I compiled from the more recent articles I found gives a better representation of the company’s performance at this point in time. RIM’s most recent quarterly report states that the company earned $934.4 million in net income, a healthy increase from the $796.7 million reported in this article around six months earlier. The Blackberry Torch was a released as RIM’s response to Apple’s iPhone back in the summer of 2010. The device however, did not fare too well against its opponent. Despite the disappointing sales of the company’s newly anticipated Blackberry Torch, the company still managed to post an increase in its net income. With that being said, RIM will be having a hard time improving their sales in the next few fiscal periods. The company’s new and heavily anticipated Playbook tablet should see a similar result as the Blackberry Torch. The Playbook will be given the daunting task to compete against Apple’s iPad 2, which already has $2.5 million sales in the month of March. RIM’s new Playbook will have a hard time competing against Apple’s popularity. RIM should look to improve on marketing to increase their success against Apple.
http://www.cbc.ca/news/business/story/2010/09/16/rim-results-quarterly.html
Tuesday, January 11, 2011
Oilsands blast ignored internationally
Summary
An oil sands explosion in an oil sands sight owned by Canadian Natural Resources is a major story across Canada, but is not attracting much attention from the rest of the world. At around 3:30 pm last Thursday near the Fort McKay First Nation, a coker (a machine that uses heat to convert bitumen to crude oil) exploded, resulting in a major fire that lasted until 6:00 pm. As a result of this, the company experienced their largest drop in shares in 5 months, losing $2.13 per share. Shares are now worth $40.82. This event will cost the company $885 million excluding tax, which will be paid over the next six months.
Connections
This article connects to the multi step income statement in this chapter. The multi step income statement introduces several new sections to the original single step income statement. The expenses from this event would fall under the “losses from unusual or infrequent events” section. This is most likely an infrequent event because of how the article describes this event as a “major story”. The company expects explosions like this to happen, but because of the rarity of these events, it is classified as infrequent. As a result of this expense, the amount recorded in this section would be $885 million. This article also connects to debits and credits. A total of $855 million would be credited from cash (assuming the payments are made using cash) and the rest would be debited from an expense account. The accounting equation would not be affected because of equal ammounts deducted from both sides.
Reflections
This is an unfortunate loss for Canadian Natural Resources Ltd, who lost a pre tax amount of $855 million over this event. The article never states why the coker exploded, whether the machine was malfunctioning or whether the workers were operating the coker incorrectly. Either way, Canadian Natural Resources will have to take extra precautions to avoid another massive loss like this in the future. Accidents like this don’t just happen spontaneously. Looking at the company’s net income during the previous year, (roughly $1.3 billion), this is a huge amount to pay off. This single expense is 65% of last year’s net income. Taking the time and money to make sure these machines are functioning properly is definitely better than losing an enormous amount of money like this over a preventable explosion.
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=cnq&lstStatement=10YearSummary&stmtView=Ann
An oil sands explosion in an oil sands sight owned by Canadian Natural Resources is a major story across Canada, but is not attracting much attention from the rest of the world. At around 3:30 pm last Thursday near the Fort McKay First Nation, a coker (a machine that uses heat to convert bitumen to crude oil) exploded, resulting in a major fire that lasted until 6:00 pm. As a result of this, the company experienced their largest drop in shares in 5 months, losing $2.13 per share. Shares are now worth $40.82. This event will cost the company $885 million excluding tax, which will be paid over the next six months.
Connections
This article connects to the multi step income statement in this chapter. The multi step income statement introduces several new sections to the original single step income statement. The expenses from this event would fall under the “losses from unusual or infrequent events” section. This is most likely an infrequent event because of how the article describes this event as a “major story”. The company expects explosions like this to happen, but because of the rarity of these events, it is classified as infrequent. As a result of this expense, the amount recorded in this section would be $885 million. This article also connects to debits and credits. A total of $855 million would be credited from cash (assuming the payments are made using cash) and the rest would be debited from an expense account. The accounting equation would not be affected because of equal ammounts deducted from both sides.
Reflections
This is an unfortunate loss for Canadian Natural Resources Ltd, who lost a pre tax amount of $855 million over this event. The article never states why the coker exploded, whether the machine was malfunctioning or whether the workers were operating the coker incorrectly. Either way, Canadian Natural Resources will have to take extra precautions to avoid another massive loss like this in the future. Accidents like this don’t just happen spontaneously. Looking at the company’s net income during the previous year, (roughly $1.3 billion), this is a huge amount to pay off. This single expense is 65% of last year’s net income. Taking the time and money to make sure these machines are functioning properly is definitely better than losing an enormous amount of money like this over a preventable explosion.
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=cnq&lstStatement=10YearSummary&stmtView=Ann
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