http://www.vancouversun.com/business/Furniture+business+customer+rebound/2782008/story.html
Summary
Because of the recession, many businesses are not doing well as before. However, it seems that some business may be making their comeback. Furniture businesses have been doing better than expected. A few years back the sales at furniture/appliance stores dropped 7% because of the economy downfall but economic forecast predicts that there will be a 5.8% growth in 2010 and 4.2% in 2011.
Connection
In Chapter 15, we learned there are two groups of people who are interested in a company’s financial statements, insiders and outsiders. Insiders of a company study the financial statements thoroughly. They find out if their company is doing well or poorly and if the company is not in good terms, they need to find out where the problem is and what to do. In the article, The Brick found out their sales have dropped by comparing financial statements of previous years and changed their management group as quickly as possible. Profits are usually related to how well the management group is performing. In this case, the company finds that the management group quality is not up to their expectations and takes immediate action.
Reflection
It is great to see that some businesses are turning around and the economy going uphill again. As everything is picking up speed people may consider in investing in businesses and in my opinion why not invest into a furniture/ appliance business. They seem to be making progress and doing well after the recession. Analyst even predicts high increase in sales. Of course relying on only analyst to predict which company is better take a look at the financial statements and compare each company. Using the current ratio, rate of return on net sales etc. these ratio will determine if the company is able to pay debt, the amount of money that remains after all expenses are deducted, etc. After thorough analysis determine then which company to invest.
Yes, I agree with Jessica that by looking at the financial statements and by calculating percentages of companies it does help investors determine which company to invest in. Despite financial statement fraud which companies “lie” on their financial statement to portray itself as the best; these are the only sources given to investors to help them with their choice of investments. In the time of recession, it is hard to believe that furniture/application is improving, but it is a good sign for Leon's Furniture. In addition, I was amazed of the Brick Group because they reacted quickly by bringing in a new management team. This change may help the company change how it used to run to make the company more efficient and profitable in the long run.
ReplyDelete-Angela Tong
I agree, I think that by caluculating the percentages and finding the ratios of a certain company, may be the simplest way to find out how well the company is doing. Moreover, I think it's the best way because it would be easier for inexperienced or first time investors to compare other companies. But I don't think investing on a furniture/appliance business is the best way to make a profit because not everyone buys furnitures everyday and appliances don't cost much. But, it's great to see that Brick Group is efficient and on top of things in order to making changes.
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