Description: The Covid crisis has been good for business at PayPal as consumers have used the online payments firm to process transactions during the boom in e-commerce during the lockdowns. Now comes word that the payments processor has an interest in Pinterest in a bid to enter the social media space. PayPal’s offer of $45 billion is priced at a premium of over 25% of Pinterest’s current valuation.
Date: October 20, 2021
1) Have you used either Paypal or Pinterest? How about your classmates?
2) How does Pinterest generate its revenue?
3) Illustration 12-4 in Wiley’s Financial Accounting: Tools for Business Decision-Making discusses three accounting guidelines for strategic investments. Which scenario do you think Paypal would find applicable to the acquisition of Pinterest?
Description: As many have noticed, food costs are rising in Canada, up about 4% over September of last year. Meat is up 10%, while cooking oils are closer to 20%. Rising prices are especially tough on low income groups – like students. Coping can involve a variety of strategies, including bulk buying by the not-for-profit sector.
Date: October 23, 2021
1) Have you or your classmates been impacted by rising food prices?
2) What strategies can you employ to stick to your food budget? Does your university or community offer any programs to help students deal with food costs?
3) Page 7-5 in Wiley’s Understanding Financial Accounting tells us about the work of the Daily Bread Food Bank. See if your class can find any discussion online about how this charity is dealing with rising prices of foodstuffs. For instance, is it using bulk-buying?
Description: An apparent power struggle is underway at Rogers Communications. This week the board removed Edward Rogers as chair, replacing him with John MacDonald, who has had a board seat for 12 years. Rogers, however, will maintain his place as a board member. He is also attempting to replace five board members with those who would presumably be more favourable to his perspective.
Date: October 21, 2021
1) How many of the students in your class are Rogers’ customers?
2) From your reading of the story, what do you think may be the causes of this difficult situation?
3) Chapter Three of Wiley’s Auditing: A Practical Approach discusses several important aspects of audit planning, including understanding corporate governance at the auditee. What might the auditors of Rogers be documenting as areas of risk as they consider these current governance issues?
Description: You may have noticed something new on the Toronto Maple Leafs outfits if you watched the NHL team in its season opener. The Leafs’ hockey helmets now sport the Tik Tok label. The site, host to the short video format that has captivated so many users, has struck a deal that also includes branding in areas inside the Leafs’ home arena. No financial terms were discussed in the article.
Date: October 13, 2021
1) Did you happen to notice the Tik Tok decal on the Leafs’ helmets?
2) What is your opinion of pro sports teams wearing advertising on their uniforms?
3) On page 8-25 of Wiley’s Understanding Financial Accounting, we can learn about the trademark registration in Canada. How long does Canadian law allow a company like Tik Tok to have exclusive right to use a trade mark?
Description: As some of the Covid restrictions are softening, sports teams are pleased to welcome the fans back into their buildings; not to mention the welcome boost to the team revenue from having fans back in the seats. But while things are looking bright in larger cities like Toronto, smaller markets like Ottawa may find it harder to fill the sporting venues. While some fans are appreciating the opportunity to get back to live sports, others may be holding back, not appreciating the notion of sitting masked for the whole game.
Date: October 12, 2021
1) Have you been to a sporting event on your university campus this fall? How was the attendance?
2) If you were a senior financial employee of one of these Ottawa sports teams, what advice might you provide to help the team through this difficult fan return phase?
3) Page 9-26 of Wiley’s Financial Accounting: Tools for Business Decision-Making discusses the trademarks of a couple of Canadian pro sports teams, including the CFL Calgary Stampeders. Perform a bit of research to see how the Stampeders attendance compares to that of the Red Blacks. Also, see if you can determine what percentage of a CFL team’s revenue comes from direct fan attendance at games.
Description: Apple is big; really big. But that doesn’t mean that the giant is immune to the same supply chain issues that have hobbled so many during these last several months. Because of the much-publicized chip shortage, Apple may end up producing 10 million fewer iPhone 13s than originally planned this year. One of the causes of the shortage has been chronic under-funding of production capacity.
Date: October 13 2021
1) Are you an iPhone user? What percentage of your classmates are using Apple products?
2) Has anyone in your class been impacted by the chip shortage?
3) Page 1-14 of Wiley’s Managerial Accounting: Tools for Business Decision Making discusses Louis Vuitton’s approach to supply chain issues in an inset box called “Lean” Luxury. Carry out a bit of a search with your classmates to determine how the current worldwide issues with supply chains have impacted this company.
Description: Last week a lot of the business news was dominated by the story of former Facebook employee Frances Haugen, a whistle-blower who testified before the U.S. Senate regarding Facebook’s alleged choice of profit over user protection. Haugen also had released various documents to the news media, casting her former employer in quite a negative light. Some are wondering if Facebook may choose to take legal action against Hagen, despite her “folk hero” status.
Date: October 9, 2021
1) Were you aware of the controversy generated by these latest disclosures about Facebook? Has this news impacted your use of either Facebook or Instagram?
2) Let’s assume you were a financial executive at Facebook. How would you advise senior management to proceed against Frances Haugen?
3) On page 2-19 of Wiley’s Financial Accounting: Tools for Business Decision Making, we read about the Price-Earnings ratio for Facebook. How would all the information swirling around Facebook these days likely impact this ratio?
Description: Alimentation Couche-Tard Inc., a large chain of convenience stores centered in Québec, has repurchased a large block of shares from one of its founders. The deal will pay Alain Bouchard approximately $300 million for over 6 million shares. A company director who chaired the special board committee that approved the deal said that the repurchase “will create value for all shareholders.”
Date: October 8, 2021
1) Is there a Couche-Tard near your university campus? Is it a popular spot for students?
2) Notice the board member’s statement that this transaction”will create value for shareholders?” What do you think that statement means?
3) Page 11-8, Exhibit 11.3, of Wiley’s Understanding Financial Accounting shows two different scenarios for recording the repurchase of shares: one when the shares are bought back at less than the original issue price and another for the opposite situation. Do a little research with your classmates to see which scenario might prevail in the Couche-Tard transaction.
Description: Canada created almost 160,000 jobs in September. That means that the country is out of the deep job loss hole prompted by the pandemic. Statistics Canada states that this job surge has pushed the unemployment rate down to 6.9 %, the lowest since the Covid-19 shutdown began. One intriguing question are how many Canadians out there have followed the model of Aaliyah Beckford who used her layoff as a chance to train for a new career?
Date: October 8, 2021
1) How are employment prospects for this year’s graduating class on your campus?
2) Do you know anyone who has taken a Covid layoff as an opportunity to train for a new career?
3) Starting on page 9-16 of Wiley’s Understanding Financial Accounting we see a section on “Current Liabilities Arising from Transactions with Employees.” Given these current job numbers, which of these liabilities might you expect to be higher than in earlier times in the pandemic?
Description: While some are divesting in oil stocks (see this week’s post on the Caisse’s divestment plans), the Bank of America is predicting oil prices will soar above $100 a barrel for the first time since 2014. Demand for the substance is expected to rise in the face of higher numbers of air travelers, oncoming winter temperatures, and a switch from natural gas to oil in the face of rising gas prices. The price rise may bring more unpleasant impacts to an economy already suffering under the weight of the pandemic.
Date: September 23, 2021
1) Does a prediction of rising oil prices surprise you, given the sluggish Covid economy?
2) If oil prices do rise, will this impact your student finances?
3) In Chapter 9 of Wiley’s Financial Accounting: Tools for Business Decision Making teaches us about reporting and analyzing long-lived assets. For an in-class activity, track down the recent financial statments of an oil and gas company. Determine what are the major long-lived assets on the balance sheet.