Businesses also suffer when massive layoffs occur. When spending by households decreases, incomes decrease for the businesses. Governments are not immune from the effects of massive layoffs of employees either. When households spend less, and businesses are selling less, there is less sales tax to be collected by the government. Also, when employees are laid off there is less income tax to be collected and to make things even worse, former employees can collect unemployment benefits from the government.
CRITICAL ISSUES * lack of smart and strong decision making because of owner and CEO’s different perspectives/priorities * sales have increased, but profitability have decreased * ineffective management of A/P and A/R have made the company insolvent * may lose loans because bank requires current ratio of 1.25 SITUATION ANALYSIS The major decisions for the company are taken by the owner rather than the CEO. The owner lacks business sense and his decisions are based on emotional feelings, not for the benefit of the company. The owner is not willing to outsource operations and wages are above industry average. From 2001 to 2005 sales have increased by 186%; whereas, COGS and selling and admin has increased by 199% and 166% respectively. High operating expenses and ineffective management of A/R have led the company to insolvency by demonstrating a quick ratio of 0.38.
Based upon social class and political power in public policy, the United States has proven to be a nation where the economy, society, and political system do not function in the same way for all of its citizens, and everybody works for the benefit of the few, and against the interest of the many. Professors Jacob Hacker and Paul Pierson argued in their book, “Winner-Take-All Politics: How Washington Made the Rich Richer – and Turned Its Back on the Middle Class” (2010), that changing tax rates has been a major factor underlying growing inequality. They claim that the globalization and technological changes are not the causes of economic struggles of the middle and working classes in the United States. Instead they blame a long series of policy changes in government that significantly favored the very rich since the late 1970s. Those changes were the result of, well-financed and well-organized efforts by the corporate sector to push government policies to lean in favor of the very wealthy.
The recession of 2007 and 2009 has affected everyone, but mostly middle class people are the ones who are hit the hardest when it comes to economic troubles. Oil prices and inflation of prices in other markets had affected the middle class’ confidence in product consumption. With less private spending, an economy cannot thrive. That is why it was important that the tax cuts were issued to help increase this spending. If people spend more then more jobs are created and business investments are made to further help increase total GDP.
The harsh recession our country has dug itself into is possible to recover from, but just as any illness can leave you under the weather for a long period of time, the economic struggle we face will take time to fix as well. Never the less, if the citizens of America don’t pull together and work to move up the economic ladder, no matter how much time Americans are given, the American Dream could be lost forever. Allison quotes another author on the same topic when he elaborates on the fact that there aren’t enough jobs in general. Think about how many people in this country are unemployed or don’t even care to seek work. Linn believes jobs are the key to the American Dream and without them success is unachievable.
ACC/291 Week 1 Discussion Questions 1. How are bad debts accounted for under the direct write-off method? What are the disadvantages of this method? The direct write-off method is when a company determines that an account is uncollectible and it charges the loss to the Bad Debts Expense. An example of this would be when a customer is not able to pay their bill because due to a downturn in the economy, money may be tight if they have been laid off from their jobs or faced with unexpected hospital bills.
The economic depression started in 1923 when Germany went through Hyperinflation. Many people struggled to make a living as prices were rising so quickly. Shortly after Hyperinflation in 1929 Wall Street in America crashed. This did not help Germany’s situation and once again many people struggled to survive with very little money. The people of Germany wanted a leader to help them and get them out of the devastation caused and unfortunately they backed Hitler.
Competition? Misguided strategies?) Princessa’s decline in sales was caused by a variety of reasons: - Canada was sliding into recession, following the economy crisis in the United States. 90% of Pricessa’s customers earned less than $45,000 annually and about half of these earned less than $25,000 annually. These low income people are likely to be affected severely by the recession, thus they would cut off their
John Bogle, founder of the Vanguard mutual fund family and father of the index fund, and Warren Buffett, likely the most successful investor of the 20th century, both speak out against high turnover in investment portfolios as an activity that serves only to reduce the returns assets can generate. Mr. Buffett places patience high on his list of qualities that make an investor successful. He is noted for saying that he only buys stocks that he would be satisfied holding if he knew that the stock market was going to be closed for the next ten years. Buffett says that ‐ “I often make more money when I am snoozing than when I am
ASSIGNMENT 1. Define the different types of unemployment, its impacts on the economy and discuss what measures should the Government take to overcome such problems. Unemployment A situation where labour force participants are available and willing to work but are unable to find jobs. Therefore the unemployment rate is a percentage of the labour force who are unemployed and are actively seeking employment. Unemployment occurs when a person is available to work but currently without work.