Description: Netflix‘s earnings per share exceeded the analysts’ estimates in its recent report on the first quarter. Conversely, the number of new subscribers was below what analysts had predicted. Overall, Netflix seems profitable with net income up to $178 million, an increase of about $150 million. The stock has been doing quite nicely, with the share price up close to 20% in 2017.
Date: April 17, 2017
1) Are you a Netflix subscriber? Why?
2) What can you find out about earnings per share and the price-earnings ratio in Wiley’s Kimmel, Financial Accounting: Tools for Business Decision-Making, Sixth Canadian Edition?
3) Why is the Earnings per Share ratio a tricky one to use in evaluating a company’s ratios?
Description: It’s probably news that Canadian dairy farmers did not want to hear. While visiting Wisconsin, U.S. President Donald Trump promised he would stand up for dairy farmers in that dairy state, criticizing current trade rules as unfair. Meanwhile, the dairy sector in Australia, New Zealand and Mexico welcomed the thought of attacking the Canadian dairy industry through the World Trade Organization.
Date: April 19, 2017
1) The article speaks about a deal that prices the ingredients for cheese-making below cost. Why would industry price ingredients below cost? Doesn’t that seem like a way to go out of business?
2) If you were providing financial advice to a Canadian dairy farmer, what might be some strategies you would recommend to help compete with the farmers from other nations?
3) Do you think that the threats from the U.S. and other nations will end up in big changes for Canadian dairy farmers?
Description: You’ve probably seen that viral video of the passenger being dragged off of the United Airlines flight. United has been taking more than a few shots in social media on this one, and perhaps the impact will be felt on its bottom line. And in the past week or so, we have seen discussion in Canada about Air Canada having disappointed passengers through the so-called bumping practice, including the bumping of a PEI family on a long-planned trip to Costa Rica. Federal Transport Minister Marc Garneau has said changes are coming to better protect Canadian air travelers.
Date: April 17, 2017
1) Have you ever found yourself the victim of overbooking on an airline flight? What happened?
2) Do you think the practice of bumping is ethical? Why or why not?
3) Do you think the recent overbooking stories will have a financial impact on the airlines involved?
Description: In the battle of the two giants, ride service Lyft raised $600 million to help it continue the market share struggle against the bigger Uber. Both of these taxi-supplanters are continuing to grow. Uber, however, is facing a few incidents of bad publicity, including the release of a video showing an executive in an unfavourable light.
Date: April 11, 2017
1) Have you or any of your classmates used both Lyft and Uber? How do they compare?
2) Which of these two companies do you think will emerge as the dominant one in the industry?
3) The article mentions that pension funds and sovereign wealth funds are now looking to private companies such as Lyft rather than public companies. Why do you think they are making these investments?
Description: It’s a bit of a mystery. The average age of new permanent employees joining the public service is 37. That seems a bit long in the tooth, don’t you think? This is causing some to conclude that millenials are avoiding the public service of Canada. This does not bode well for the level of talent the public service can provide to help meet Canada’s challenges.
Date: April 10, 2017
1) If you graduating, have you considered a career in the public service? Why or why not?
2) What kind of roles might be available for accountants in the public service?
3) What does the coming retirement of so many baby boomers mean for the composition of the public service?
Description: Tax reform in Canada is a topic in the air as Conservative Party candidates vie for the leadership post and talk of tax reform under U.S. President Trump spurs conversations around Canadian competitiveness. National Post columnist Andrew Coyne contends that it has been over 30 years since Canada has seen significant tax reform. Mr. Coyne argues that various problems with calculating income can be addressed by enacting a system based on a personal consumption tax and a corporate net cash flow tax.
Date: April 10, 2017; updated April 11, 2017
1) If Mr. Coyne’s ideas were adopted, would this lessen the focus on corporate income statements and increase the visibility of cash flow statements?
2) What impact would these changes have on employment of accountants?
3) How likely is it that the federal government will go ahead with these changes?
Description: With an overheated housing market in Toronto, Canadian Finance Minister Bill Morneau is set to meet with provincial and municipal officials to develop ideas on how policy makers might tame this housing bubble. Tax policy offers a number of options for intervention. For example, the federal government could raise the capital gains tax on homes that don’t qualify as a principal residence. Further, the federal government could raise the amount buyers could ‘borrow’ from their RRSPs to fund home purchases.
Date: April 7, 2017
1) Are you graduating this spring? Is purchasing a home on the horizon for you?
2) Which of the polices proposed in the Globe and Mail article do you feel would be the best for taming the housing bubble in Toronto?
3) What will be some of the impacts on taxpayers if the federal government enacts these measures?
Description: Last week this blog discussed how the assessment service in Province of New Brunswick invented renovations for over 2,000 residential properties in the province, causing big increases in tax assessments. The Premier has responded to the growing crisis by appointing a retired appeal court justice to examine the system. Anonymous insiders have claimed that invented assessments are the result of government direction to fast track a new assessment system.
Date: April 3, 2017
1) Do you think that using the Auditor General’s Office (rather than a retired judge) to investigate these problems would offer a different perspective?
2) Notice that rushing the system changes through is listed as a possible cause of this crisis. During your university courses, have you studied any famous cases where rushing system changes resulted in disaster?
3) Do you think that the actions in this case could possibly be called a fraud?
Description: In an intriguing display of public outrage, approximately 200 protestors gathered outside Bombardier headquarters in Montreal to decry the bonuses granted to company executives while taxpayers have been bailing out the company. With both the federal and provincial governments kicking in over a billion dollars, citizens were outraged that the company opened up the cash box for its management. In response, Bombardier announced they would defer the bonuses until 2020.
Date: April 2, 2017
1) Were you familiar with the government assistance to Bombardier? Do you agree with this as a wise use of taxpayers’ money?
2) If you were a senior executive at Bombardier, how would you have responded to this protest?
3) What does accounting theory teach us about structuring compensation for executives?
Description: And in a second accounting update from the small Province of New Brunswick, a recent investigation by the CBC has revealed that government officials invented renovations for over 2,000 residential properties in the province, creating big increases in tax assessments for the homeowners. An email revealed that government invented the renos when assessment officials did not have the resources to confirm whether or not they had taken place. The Premier is stating he knew nothing of the invented renovations.
Date: March 31, 2017
1) Where can you read about accounting for land and real estate in Wiley’s Kimmel, Financial Accounting: Tools for Business Decision-Making, Sixth Canadian Edition?
2) What do you think may have prompted those in the civil service to have taken the rather unusual (and unethical) step of inventing renovations?
3) Do you believe the government ministers in charge of the matter should resign?