Recession- The recession is an opposite of boom stage. The unemployment increase, most of firms are losing confidence and stops invest or expand. They may change their planning and started to survive. The customers are likely to save money then spend and the percentages of loans are high and may increase. Individuals are losing jobs and the government have to spend more money of benefits.
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. Under the direct write-off method, companies record bad debts expense in a period that is different from the period in which they record the revenue. The method does not attempt to match bad debts expense to sales revenues in the income statement. The direct write-off method show accounts receivable in the balance sheet at the amount the company actually expects to receive. Unfortunately, unless bad debt losses are insignificant to the company, the direct write-off method is not acceptable for financial reporting
Argument: Due to the economic recession possibly coupled with poor financial decisions, Astrigo missed its earnings estimate by 20 cents a share and profits had dropped by double digits, regardless of efforts to slash inventory and expenses. Although Astrigo enacted aggressive promotions and price cuts, the Astrigo home-improvement stores were losing sales to cheaper retailers with far worse customer service. During the time of their financial struggle customer service was still upheld, talented team members remained innovative, and steps were taken to cut costs and drive sales (promotions, price cuts, slash inventory and expenses). There were strong implications, however, that Astrigo’s executive team may have been spending money in the wrong places. These implications come from the fact that the CFO, during a time when Astrigo was financially unstable, was making decisions about whether or not to layoff workers in an expensive and exclusive dining club.
If a new business opens and has one or both of these products in stock, we would likely lose potential customers. If they follow a similar marketing plan, we could lose our client referrals to a business with more diverse products. We’ve seen tremendous growth this year, going from taking a $4000 loss in the first year, to a $30,000 profit this year. These risks are most likely not detrimental to our business, but could prevent a profit decrease due to
A firm’s performance is negatively impacted because it hires fewer employees, which decreases output and profit. Consumers and taxpayers end up paying for such costs through higher prices. The ability of the United States to stay globally competitive is diminished, thus efforts to cut costs push many companies to send jobs abroad. In the long-term, members of a union also become affected due to changes in the market environment—e.g. new entrants, including foreign competition within the domestic boundaries, so they may have to adapt to such changes by accepting lower wage rates.
The next stage is Depression, this is where there is a lengthy period of declining Gross Domestic Product (GDP) – this is where there is little to no customer spending (there is some increase in the rise of employment). The last stage is Recovery, this is where the business starts to get better; the customers increase their spending, the business starts to feel more confident in their products and profits & unemployment is still continuing. b) Describe what influence the recession stage would have on your chosen business. If Tesco go into the recession stage of the business cycle that would influence them to cut back on hiring new employees when their revenues and profits start to go down, and also the business might chose to stop buying new equipment and stop new
In our case, for years six and seven we see an increase of 37.5%, and then in years seven to eight there was a 16.3% decrease. This could be caused by either selling less, through an increase in the cost of goods sold, or a combination of the two. The gross profits come as no surprise when the net sales of decreased significantly between years seven and eight. The company attributes the loss in sales to the lack of sponsors for their professional rider customer base. Many of competition bikes customers are sponsored and with the current economy many sponsors are cutting back funding which will have a negative impact on sales for Competition Bikes Inc.
Each year's deficit is added to the national debt. During a time of recession if there is a surplus, this will decline creating a deficit. A deficit will happen during a recession because workers may lose their jobs and corporation will see a decline in their profits, this decline does affect the Government’s ability to pay their debt without borrowing the monies to do so. References http://www.washingtonpost.com/opinions/charles-lane-the-feds-role-in-the-debt-debate/2012/12/03/ed5951cc-3d6a-11e2-a2d9-822f58ac9fd5_story.html http://economics.about.com/od/recessions/a/budget_deficits.htm Week 4 – Learning Team Weekly Reflection Aadil Ansari, Alexandra Lyddane, Joshua Bollman, and Judy Miller ECO/372 July 1, 2013 Jack Karczewski Week four has proved to be as interesting and informing as the first three weeks. This week, our learning objective that
“For instance, the fall in the wage lowers people’s income and thereby reduces demand. That reduction may feed back to firms and reduce the demand for their goods, which might reduce the firms’ demand for workers” (Colander, The Limitation of Supply/Demand Analysis, 2010). “If these effects do occur, and are important enough to affect the result, they have to be added for the analysis to be complete. A complete analysis always includes the relevant feedback effects” (Colander, The Limitation of Supply/Demand Analysis,
Dawn Chadwell March 23, 2015 English 102 Professor Scott Overseas Outsourcing The discussion regarding U.S companies outsourcing internationally to countries such as India, Pakistan, Philippines, China and dozens more is highly controversial. What a lot of people don’t know is that outsourcing is a much older practice. Merchant companies or large businesses can cut their material cost and employee labor considerably by outsourcing. This has made the big corporations close their factories in the U.S and move them overseas to undeveloped countries. The citizens of these countries will work for lower wages, in dangerous conditions and have fewer restrictions as far as labor rights.