Description: One unusual outcome of the current corona virus situation may have been the unusual co-operation at the Legislative Assembly of New Brunswick on Friday. While budget debates are often long and perhaps divisive, this year in NB the budget and an additional bill passed in 17 minutes, with no one voting against the budget. With NB’s government in a minority situation, there had been some earlier thought that the government might fall. But with so many preoccupied by the COVID-19 situation, the consensus seemed to be it was not time for a spring election.
Description: Mortgage rates in Canada took a drop this week following the Bank of Canada’s 50 basis points cut to its rate. The site ratespy.com – https://www.ratespy.com/ – estimated that for each 1/2% cut in interest rates, Canadians would save $500 per year on each $100,000 borrowed. This is Canada’s lowest interest rate since the recession of 2008. The reason for this cut: you guessed it; the corona virus.
1) Do you plan on buying a home after graduation? Does this cut in rates impact your timeline?
2) Why would the Bank of Canada be cutting its rate during a temporary crisis like this?
3) Read the “Accounting Matters” section on page 535 of Wiley’s Financial Accounting : Tools for Business Decision-Making. What has the Bank of Canada said is one of the top risks to Canada’s financial system?
Description: The federal government has told Canada’s big 3 telecoms – Bell, Rogers, and Telus – to cut their cellphone rates by 25%, or else. Innovation, Science and Industry Minister Navdeep Bains told the companies that if they don’t take action within two years, then the politicians will step in to force them to. On the company side, the response seems to be that cutting rates could result in declining capital investment or even court challenges.
1) How much are you paying for your cell service? How does this compare to what your classmates are paying?
2) Do you think that a government should order a private enterprise to cut its prices?
3) Wiley’s Financial Accounting : Tools for Business Decision-Making talks about accounting for research and development costs on page 485. Do you think the government’s action might impact the telecom’s spending on R&D?
Description: The Canada Revenue Agency (CRA) had said they would make income tax preparation easier for Canadians. Globe and Mail columnist Rita Trichur has noted an inconsistency in the plan though: CRA has doubled the size of the form from four to eight pages. As she says, “Folks, it’s hard to know whether to laugh or cry.” Her suggestion is that Canada join other countries and have the CRA do the taxes for most of us. They already have the information from most Canadians anyway.
Description: The Financial Post took an interesting approach to February 29 this year, slowing things down a bit to reflect on what happens during one day in the Canadian economy. Among the fascinating facts listed is that 4,240,584 barrels of oil are taken from the earth while at the same time 63.7 carats of diamonds are mined up in the Northwest Territories. Meanwhile, on the ocean hard work results in a harvest of 266,800 kilograms of lobster.
Description: HBC is no longer going to be a publicly-traded company. Chairman Richard Baker won a shareholders’ vote in his third bid to take the company private. In June 2019 Baker offered $9.45 a share, but this drew negative shareholder reaction. By this January the offer was sweetened to $11 per share, and 98% of the shareholders jumped on board.
Description: Over the last few weeks, these Weekly Updates have featured a couple of stories on the impact of the Corona Virus on business: one dealt with how Canada Goose believes that the virus will impact its sales in China, and another talked about the impact of the illness on the travel industry. Now, stock markets have dropped for six days in a row in anticipation of negative impacts on business in general. No sector on the TSX seems to have escaped the wide swath of decline.
1) Do you normally discuss market trends in any of your university classes? Have the last few days been any different?
2) Why does fear seem to be so hard on the stock markets?
3) Starting on page 565 of Wiley’s Understanding Financial Accounting we learn about the Price/Earnings Ration (P/E). What would be happening to the P/E ratios of most firms during this market decline?
Description: This week Jeff Bezos, the world’s richest man, said he would commit $10 billion of his wealth to a new foundation set up to fight climate change. Amazon has faced criticism for contributing to the climate problem through its many home deliveries and its vast server farms. The new foundation will start issuing grants soon. No word yet on whether the timing of the announcement had anything to do with the anticipated PBS Frontline documentary scheduled for Tuesday, February 18.
1) Have you contributed to the Amazon carbon problem by using quick delivery via Amazon Prime or partaking in its web services?
2) Have you or any of your classmates watched the Frontline documentary? What are the strengths and the weaknesses of Amazon’s business model?
3) On page 86 of Wiley’s Financial Accounting:Tools for Business Decision-Making, we read information from a recent financial statement of Indigo, a Canadian company that is a direct competitor of Amazon. What strategy might you recommend to Indigo in dealing with the challenges posed by such a large competitor?
Description: As rail blockades continue in Canada, inventory is beginning to build up at major Canadian ports of Halifax, Montreal, and Vancouver. Atlantic Container Line (ACL) says 90% of its business usually moves out of ports by rail, but the current blockades are hitting the normal routes hard. ACL has started to move shipments to the harbours of Baltimore and New York in order to route freight through the United States. Meanwhile, Superior Propane says its supplies are running low, putting households and various establishments at risk of running out.
1) Have you encountered any shortages yet as a result of the rail blockade?
2) If you were working for a business that could not get supplies by rail, what might you recommend to your management team?
3) On page 321 of Wiley’s Financial Accounting : Tools for Business Decision-Making, you can read about the just-in-time approach to supply chain operations. How might this current blockade impact a company wiht the just-in-time approach?
Description: Many Canadians love to play that annual Tim Horton’s contest, Roll up the Rim, with its wide assortment of prizes. But this year you’ll only be able to roll up a real cup rim for the first two weeks of the contest. For the remainder of the time, you’ll be expected to bring a reusable cup and register through Tim’s rewards card to play the game online. Tim Horton’s will help customers with that by giving away over $1 million in reusable cups prior to the contest.