Chapter 14: Plastic over Cash

http://www.theprovince.com/Canadians+favour+plastic+over+cash/3955805/story.html

Summary:

Canadians consumers who lean towards a certain payment method prefer credit and debit cards more. On the other hand, cash is now being ignored and used less frequently. A survey that has been released by Ipsos indicates that people who hold at least one credit card show that 34 percent of people polled to be using a debit card for over-the-counter transactions more than the credit card or cash payers combined. It was polled that 25 percent of the people they had surveyed preferred to use credit cards. Meanwhile, only 1 out of 10 people used cash more than debit and/or credit cards combined; while the rest used a mixture of payment methods. It was discovered that people who were heavy credit card users would use them more than twice the average cardholder in both value and frequency. The cardholders seemed to favour using their credit cards at grocery stores. On the other hand, small purchases were paid with either cash or the debit card. Stated by John Mohler, associate vice-president with Ipsos, “This indicates growth potential for credit card use.” Although numerous sums of consumers are concerned about money management or spending control issues with the credit card, a small minority feel the opposite and believe that the credit card will act as a tool to help manage spending and save them money in the future.

Connections:

 A majority of consumers who favour using credit cards compared to the other methods of payments is a benefactor to merchants. They will be able to receive quick payments for the credit card sales and won’t have to worry about collecting the money owed from the customer later on. I find that the consumers who believe that the credit card will act as a tool to help them manage their spending are right to an extent. Why do I agree with the consumers? It’s because the bank doesn’t provide the credit card service for free. They will charge you transaction fees or annual fees to the cardholders. It doesn’t just end here with the charges, it will also charge you interest if you are unable to pay off the overdue balance on the card. However, a free method of managing your account is using the passbooks that the banks provide to check your balance. This will put a halt to the compulsive shoppers who want to save up; because of the small charges here and there for every item they buy which will accumulate in price.

Reflections:

 Credit cards are handy and convenient to use because of the little space it takes up in your wallet and it weights close to nothing, and of course are great for emergencies when you don’t have enough cash on you.  As the article stated that the heavy credit card users would use the card double the average cardholder In value and frequency, it is also a bad thing because certain consumers aren’t disciplined in their spending budget and will assume that because the items they bought will be on credit they have time to earn money to pay for it when the bill comes. Inevitably if this pattern continues consumers all over the world with this habit are doomed to struggling to meet ends meet and living off pay check to pay check without any extra money for savings. This is a life I would not want for myself, personally I think that I would be the type to only use my credit card for large purchases because I want to avoid unnecessary service charges.

Chapter 11: Apple profit, revenue easily beat Wall Street targets

http://www.vancouversun.com/business/Apple+profit+revenue+easily+beat+Wall+Street+targets/3689773/story.html

Summary:

Apple Inc. recently exceeded their expectations towards their profit and revenue which made them have stronger predictions of their next profit and revenue value as the iPhone sales launched. However it resulted in weaker unexpected gross margins, along with iPad shipments disappointing investors. Therefore, the Apple shares fell 7% in the extended trading. The gross margins of the fourth quarter in the fiscal period came to 36.9%, lower than Wall Street’s average prediction of 38.2%. Yet again, Apple disappointed Wall Street’s expectations when it only sold 4.2 million iPads in its second quarter in the market. However, the shipments of more than 5 million tablet computers launched only in April which was not enough to satisfy the public’s demand. Analysts warned that due to the limited amount of supplies available will hold back sales. The company reported a net profit of $4.31 billion for the fourth quarter in the fiscal period which ended on September 25, 2010. This was an increase from the $2.53 billion profit from the year ago period. According to Thomson Reuters I/B/E/S, the profit was better than the estimated average made by the average analyst. This phenomenon not only exceeded expectations but also exceeded past predictions. Apple Inc’s revenue not only increased by 67% to $20.3 billion, but surpassed Wall Street’s target of $18.9 billion. Apple Inc’s estimate of this current fiscal quarter earnings is $4.80 a share on revenue of $23 billion.

Connections:

In this article it displays the importance of having a large inventory in a merchandising business, because as it was stated in the article, the company Apple would’ve made a higher profit if they had a larger inventory to satisfy the public’s hunger for their products. The reason for this is because inventory is strongly linked to the net profit in this type of business. Another connection would be the gross profit, because in this type of business, the amount of profit comes from the net sales over the cost of goods sold. This displays how well a company is doing by being able to still earn a gross profit after selling the products they bought. Therefore proves how well a business is doing by looking at the gross profit.

Reflections:

The article shows that by being an accountant you also need to be able to predict the amount of products should be stocked up in the inventory and the demand of the product during that time period, to maximize chances of a higher profit. Knowing that a certain product is in high demand, a business could be using it to its full potential and taking advantage of it by stocking up and advertising that certain item .By being educated in predicting the market it will not only help with the business’ future with benefits of gaining more publicity of surpassing estimates that analysts have predicted. In my opinion, when you enter a store hoping to buy a product, you assume that it will be in stock. Having the disappointment of wanting something but not having it available at that certain time can bring down your business because a customer will feel discouraged that your store isn’t fully stocked and having to waste their time by talking about the product and ending up coming out of the store empty handed.