Link to Financial Statements: http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=app
Question: Reviewing the available financial statements from 2007-present, as well as past articles, when did the company start declining? And where?
Answer: After a detailed analysis of American Apparels financial statements from 2007 to 2010, it is visible that the company started to decline in 2008. Various reasons lead to this downfall such as numerous sexual harassment lawsuits made against the CEO of American Apparel, Don Charney, in the years of 2008 to 2009. Another factor that had an impact in the company’s well-being was the fact that illegal, unauthorized workers were employed in their factories. As a result, many lawsuits were made against American Apparel for their horrible choices in employment which ultimately caused American Apparel to fire roughly 2000 employees from working in the factories. With so many workers laid off, American Apparel had a hard time recovering from their loss of employees causing a decline in productivity in the factories and in sales. With sales decreased combined with the many lawsuits and loss of employment, American Apparel was faced with a substantial net loss of $86.32 million in 2010. Because of this large loss, American Apparel was unable to sustain their company over the next year. Although in previous years American Apparel was seen as a new thriving company their many lawsuits and loss of employment caused the company to almost declare bankruptcy in August of 2010.
Question: Take a look at the recent financial statements (cash flow statement in particular) – with 14 million injected into the company right away, how should the company allocate this money? Into which activities? And why?
Answer: The injection of $14 million temporary saved the company from bankruptcy in which they had almost needed to declare in the August of 2010. In my opinion, this $14 million dollars should be placed into operating activities where marketing activities are increased to try to grab consumers to purchase their products ultimately increasing their sales. Placing money into marketing will also help clean up American Apparels image from their previous sex harassment lawsuits with advertisements that are not sexual causing a lowered consumer interest. In addition, American Apparel should also focus in using the some of the money to develop newer products that will help increased consumer interest which will help gain sales once again.
Tuesday, May 3, 2011
Thursday, April 14, 2011
LE CHÂTEAU REPORTS THIRD QUARTER RESULTS
http://www.newswire.ca/en/releases/archive/December2010/10/c4263.html
Summary
At the end of the third quarter ended October 30, 2010 sales for Le Chateau had decreased by 1.2% which in further analysis shows a decrease from last year’s third quarter from $75.3 million to $74.4 million. In continuity to this situation, in store sales decreased by 3.5% which adds to the negative impact against Le Chateaus total earnings which are displayed in their cash flow statement. In addition, net earnings for the third quarter ended October 30, 2009 decreased from 5.6 million to 2.7 million for the third quarter ended October 31, 2010. Earnings per share were also diluted for the third quarter from the previous year amounting to $0.23 per share to $0.11 per share. In the first nine months of the year Le Chateau opened 9 new stores, closed 4 stores and expanded 17 of their existing locations. These factors played a large role and added on to the spending costs for Le Chateau which did not benefit Le Chateau when it came to helping with sales. All in all, Le Chateau was hit hard this year not being able to meet their total sales goals for the year.
Connection
Le Chateau’s Cash flow statement shows that for the three months ended October 2010, a decrease in Net earnings of $2913 from the previous year’s results and an even larger amount from previous years. This tremendous change in Net earnings is a significant sign that Le Chateau was not able to meet their financial goals for the months ended October 2010. Shown in the Financial Activities section of the cash flow statement, Le Chateau is still currently paying off a long-term debt. In addition to their debt, Dividends are still needed to be paid off to various shareholders. Being in no position to be able to pay off these debts and payments to various businesses, Le Chateau was not able to be financially strong during this time period. In further analysis, Le Chateau’s cash and cash equivalents at the beginning of the period were deducted an amount equaling $6,221; they began with $15,967 and ended with $9,746. This shows the amount of money Le Chateau had lost during the three months ended October 2010 from spending cash on various attributes to the company. Many of the factors pertaining to the cash flow statement had a negative impact which ultimately had a negative impact on the company’s performance as a whole.
Reflection
From my understanding, Le Chateau was faced with an unpleasant situation during these three months ended October 2010. Their business was impacted by a lack of sales in which caused their Net earnings account to have plummeted compared to previous years. Although Le Chateau was hit with unfortunate circumstances it is possible for them to regain lost interest from consumers. Le Chateau, being a store for contemporary fashion apparel, accessories and footwear, will most likely make a striking increase in their sales during this time of the year due to many graduates looking for suits and dresses for graduation. In addition, their sales may have not been so great during the three months ended in October due to the fact that weather conditions were not suitable for their type of fashion apparel. Warmer weather is starting to be more visible in which consumers will be able to wear fashion apparel made by Le Chateau.
Summary
At the end of the third quarter ended October 30, 2010 sales for Le Chateau had decreased by 1.2% which in further analysis shows a decrease from last year’s third quarter from $75.3 million to $74.4 million. In continuity to this situation, in store sales decreased by 3.5% which adds to the negative impact against Le Chateaus total earnings which are displayed in their cash flow statement. In addition, net earnings for the third quarter ended October 30, 2009 decreased from 5.6 million to 2.7 million for the third quarter ended October 31, 2010. Earnings per share were also diluted for the third quarter from the previous year amounting to $0.23 per share to $0.11 per share. In the first nine months of the year Le Chateau opened 9 new stores, closed 4 stores and expanded 17 of their existing locations. These factors played a large role and added on to the spending costs for Le Chateau which did not benefit Le Chateau when it came to helping with sales. All in all, Le Chateau was hit hard this year not being able to meet their total sales goals for the year.
Connection
Le Chateau’s Cash flow statement shows that for the three months ended October 2010, a decrease in Net earnings of $2913 from the previous year’s results and an even larger amount from previous years. This tremendous change in Net earnings is a significant sign that Le Chateau was not able to meet their financial goals for the months ended October 2010. Shown in the Financial Activities section of the cash flow statement, Le Chateau is still currently paying off a long-term debt. In addition to their debt, Dividends are still needed to be paid off to various shareholders. Being in no position to be able to pay off these debts and payments to various businesses, Le Chateau was not able to be financially strong during this time period. In further analysis, Le Chateau’s cash and cash equivalents at the beginning of the period were deducted an amount equaling $6,221; they began with $15,967 and ended with $9,746. This shows the amount of money Le Chateau had lost during the three months ended October 2010 from spending cash on various attributes to the company. Many of the factors pertaining to the cash flow statement had a negative impact which ultimately had a negative impact on the company’s performance as a whole.
Reflection
From my understanding, Le Chateau was faced with an unpleasant situation during these three months ended October 2010. Their business was impacted by a lack of sales in which caused their Net earnings account to have plummeted compared to previous years. Although Le Chateau was hit with unfortunate circumstances it is possible for them to regain lost interest from consumers. Le Chateau, being a store for contemporary fashion apparel, accessories and footwear, will most likely make a striking increase in their sales during this time of the year due to many graduates looking for suits and dresses for graduation. In addition, their sales may have not been so great during the three months ended in October due to the fact that weather conditions were not suitable for their type of fashion apparel. Warmer weather is starting to be more visible in which consumers will be able to wear fashion apparel made by Le Chateau.
Wednesday, January 19, 2011
Apple Reports Fourth Quarter Results
http://www.apple.com/ca/pr/library/2010/10/18results.html
Summary:
Apple recently released financial results for its fourth quarter of the 2010 fiscal period. With high results, the company had recorded revenues of $20.34 billion and a net quarterly profit of $4.31 billion ($4.64 per diluted share). Last year’s quarter results show that revenue had increased significantly comparing $12.21 billion and net quarterly profit of $2.53 billion ($2.77 per diluted share). Apples gross margin was 36.9 percent compared to last year’s 41.8 percent. In addition, 57 percent of this quarter’s revenue came from international sales. With increases happening in all parts of the company, sales of 3.89 million Macs occurred during the quarter making it a 27 percent unit increase over the year. Apple had also sold 14.1 million iPhones in the recent quarter making it a 91 percent unit growth during the past year. With further information it is noted that 9.05 million iPods were also sold during the quarter which had represented an 11 percent unit decline from last year. The new iPad had made an astonishing 4.19 million sold during the quarter.
Connection:
Chapter three and this article had strong ties between gross margin percentages, closing entries and the accounting cycle. The gross margin was calculated through a series of reductions and as stated in the article, Apple’s gross margin decreased from last year’s amount. Through a series of steps including steps in the accounting cycle, Apple was able to generate their results. The accounting cycle helped to make financial statements that have allowed companies to compare results from year to year. After Apples fourth quarter, closing entries were made in the journal to allow a final sum up of the quarter’s revenue. Temporary accounts were transferred to permanent accounts and adjusted entries were made before closing the year 2010 fiscal.
Reflection:
After years of building up reputation, Apple has finally proved itself superior among electronic devices. Apple has been delivering great products including the new iPad, the iPhone 4 and the soon to come, iPhone 5. I am not surprised that Apple has had increased net profit over the past years. Their continuation to grab consumer’s attentions is increasing. Apple products continue to dominate the market with increasingly high demands through all their products except for possibly their iPod product. The iPod has been around for a long time which defeats itself when Apple had come out with products that are not only phones but also media players. All in all, I am certain that Apple Inc. will continue to amaze everyone with new products and also generate more revenue in the years to come.
Summary:
Apple recently released financial results for its fourth quarter of the 2010 fiscal period. With high results, the company had recorded revenues of $20.34 billion and a net quarterly profit of $4.31 billion ($4.64 per diluted share). Last year’s quarter results show that revenue had increased significantly comparing $12.21 billion and net quarterly profit of $2.53 billion ($2.77 per diluted share). Apples gross margin was 36.9 percent compared to last year’s 41.8 percent. In addition, 57 percent of this quarter’s revenue came from international sales. With increases happening in all parts of the company, sales of 3.89 million Macs occurred during the quarter making it a 27 percent unit increase over the year. Apple had also sold 14.1 million iPhones in the recent quarter making it a 91 percent unit growth during the past year. With further information it is noted that 9.05 million iPods were also sold during the quarter which had represented an 11 percent unit decline from last year. The new iPad had made an astonishing 4.19 million sold during the quarter.
Connection:
Chapter three and this article had strong ties between gross margin percentages, closing entries and the accounting cycle. The gross margin was calculated through a series of reductions and as stated in the article, Apple’s gross margin decreased from last year’s amount. Through a series of steps including steps in the accounting cycle, Apple was able to generate their results. The accounting cycle helped to make financial statements that have allowed companies to compare results from year to year. After Apples fourth quarter, closing entries were made in the journal to allow a final sum up of the quarter’s revenue. Temporary accounts were transferred to permanent accounts and adjusted entries were made before closing the year 2010 fiscal.
Reflection:
After years of building up reputation, Apple has finally proved itself superior among electronic devices. Apple has been delivering great products including the new iPad, the iPhone 4 and the soon to come, iPhone 5. I am not surprised that Apple has had increased net profit over the past years. Their continuation to grab consumer’s attentions is increasing. Apple products continue to dominate the market with increasingly high demands through all their products except for possibly their iPod product. The iPod has been around for a long time which defeats itself when Apple had come out with products that are not only phones but also media players. All in all, I am certain that Apple Inc. will continue to amaze everyone with new products and also generate more revenue in the years to come.
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