What the gross sales to equity ratio is used for

There are many financial ratios, some measure business liquidity, and others measure profitability. The gross sales to equity ratio measures 1. effective use of capital 2. indicates potential financing discrepancies and 3. illustrates the relationship between equity levels and sales. There are also quite a few things this ratio doesn't do such as determine the affect of seasonal and cyclical cycle on sales, but it can generally be referred to as a performance ratio and potentially be used as a variable in sales forecasts.

Complete article link: http://www.ehow.com/info_8511852_gross-sales-equity-ratio.html

GDP Revisited: Are Statistics Reliable Enough for Financial Decision Making?

Relying on statistics when making personal financial decisions can be a tricky and risky business. The word 'statistic' when looked at from a purely semantic perspective does not mean 'factual' and the sheer complexity of determining statistical validity leaves plenty of room for confusion.

If any statistic has no demonstrated validity to qualify it, it's as good as an unsorted statement in an academic journal and hasn't been substantiated to the reader. This alone should cause one to think twice even if those statistics are coming from a reliable source. 

Statistics are often based on samples which makes those measurements representative at best. Furthermore, how those samples are selected leaves lots of room to manipulate the statistical results before they're even measured. Similar to attorneys weeding out jury candidates least likely to agree with their legal arguments.

Let's take a look at the following bar graph from the BEA to see where there is room for confusion:

• No reference to statistical validity is given

• Graph represents percent change not dollar value

• GDP itself is measured in a 'specific' way

• Doesn't mention inclusion of Government spending

• 'Seasonal adjustments' not accounted for in graph

The following table excerpt, also from the Bureau of Economic Analysis points out GDP in 2005 dollars is lower meaning the intrinsic value of GDP is actually lower. Someone looking at the GDP bar graph might actually assume it represents actual GDP.

Quarterly
(Seasonally adjusted annual rates)
	GDP in billions of current dollars	GDP in billions of chained 2005 dollars
2005q4	12,915.6	12,748.7
2006q1	13,183.5	12,915.9
2006q2	13,347.8	12,962.5
2006q3	13,452.9	12,965.9
2006q4	13,611.5	13,060.7
2007q1	13,789.5	13,089.3
2007q2	14,008.2	13,194.1
2007q3	14,158.2	13,268.5
2007q4	14,291.3	13,363.5
2008q1	14,328.4	13,339.2
2008q2	14,471.8	13,359.0
2008q3	14,484.9	13,223.5
2008q4	14,191.2	12,993.7
2009q1	14,049.7	12,832.6
2009q2	14,034.5	12,810.0
2009q3	14,114.7	12,860.8
2009q4	14,277.3	13,019.0
2010q1	14,446.4	13,138.8
2010q2	14,578.7	13,194.9
2010q3	14,745.1	13,278.5
2010q4	14,871.4	13,380.7
2011q1	15,010.3	13,441.9

Even the accuracy of statistics can be measured in a number of ways. Perhaps even too many ways as the usefulness of anything becomes questionable if it has to be tested, retested and be the subject of a barrage of diagnostics before an assessment can be made about its accuracy. In actual dollars the percentage change from 2010 Q4 to 2011 Q1 is less than 1/2 a percent, 50 basis points or .005 percent which all mean the same thing. 

So how should one use statistics to make decisions in personal finance and what kind of decisions can be made with statistics? For starters subtracting government spending from deficit spending will yield a number of non-leveraged GDP which can be more realistic. Secondly, looking at just GDP may provide an overly generalized and depending on the graph, inaccurate economic performance metric. 

How Outsourcing Benefits Business and the Economy But Not Necessarily Individuals

Outsourcing does cause job losses, and can contribute to lower consumer spending but it can make corporations wealthier. Over the long run, wealthy corporations are advantageous to the economy especially if that wealth is used to grow businesses and increase employment.

For people who lose jobs it's difficult to rationalize the personal implications of being part of a greater economic formula that theoretically benefits the population at large. For businesses, outsourcing often has many benefits that assist in meeting corporate goals, shareholder expectations and economic objectives.

To not outsource would be riskier than outsourcing and the benefits of outsourcing outweigh any disadvantages if accounted for properly. In the long term outsourcing provides corporate, community and economic cures that would be a missed opportunity had outsourcing never taken place. Below are a few of the benefits enjoyed by companies that successfully outsource.

• Lower employment related costs
• Increased revenue
• More investment capital
• Creation and/or maintenance of more specialized jobs
• Improved competitiveness
• Outsourcing reduces the need for office space in pricier real estate markets lowering overhead costs.

The negative impacts of not outsourcing

Companies outsource to exist in a competitive world with the hope of getting an edge. If they didn't outsource they could potentially face lower profit margins, decreased equity capitalization, reduced advertising, marketing and research budgets in the short term alone. In the long term a chronic decrease in profit, equity, leveraging and operating budgets could lead to decreased market share, higher financing interest rates, even more decreases in profit and budgets and then possible downsizing, take over or bankruptcy.

Social consequences of outsourcing do not outweigh the benefits

While outsourcing may not be considered ethical or valuable to a community of workers the benefits outweigh the costs at both the corporate and macro-economic levels. The corporate advantages are outlined above and the economic benefits include the following:

• Potential for higher Gross Domestic Product (GDP)
• Increased financial leveraging both domestically and internationally
• Improved chances of economy improving innovations across various industries
• Possible increased market share and/or reduce market share loss
• Greater global market positioning in terms of GDP can lead to
• Sustained and/or improved confidence in national currency

It is evident outsourcing not only advances corporate goals but also national goals. While it is true that not everyone benefits from downsizing the advantages to a nation outweigh the costs. Laid off workers who retrain have a greater chance of improving their financial situations and in the long run a more specialized and skilled workforce can emerge in part from the effects of outsourcing. This more skilled and specialized workforce can be advantageous both at the community level, corporate level and national level in terms of know how, income potential and standard of living.

Outsourcing is more likely to be a cure for corporate ailments than a problem. The advantages can be seen across more than corporate balance sheets and income statements, but also in society, national economic performance in addition to corporate bottom lines. There a few negative short term impacts on local communities of workers, but in the long run, the advantages do outweigh the costs, and future generations may be thankful that outsourcing has taken place.

A Look at The Agricultural Bank of China's IPO

The Agricultural Bank of China, one of China's four largest banks went public in the week of July 5, 2010. The bank's shares will be listed in the Shanghai Stock Exchange, and Hong Kong Stock Exchange later in July, and is the last of the four banks to go public. The amount of money to be raised by the Initial Public Offering (IPO) is believed to be close to the largest in history to date, and has implications for the Chinese economy and banking industry.

The Agricultural Bank of China

Image source: 'Hwangxiheng'; CC BY-SA 3.0

• The IPO's will add needed capitalization to the bank

Whether or not the world's largest IPO will indeed be the Agricultural bank of China (ABC.UL) depends on how many shares are issued by the bank. On July 7, 2010, CNN Money reported the Chinese Agricultural Bank had already sold $19.2 billion USD worth of shares in a combined Hong Kong and Shanghai IPO.(2)
Unless the Agricultural Bank of China exercises the option to sell additional shares reserved for overflow demand, Reuters reports the IPO will not exceed the 2006 record for the World's largest IPO held by the Commercial Bank of China at $21.9 billion. (4)

If the Chinese Agricultural Bank does use all its available share offering, it will raise $22 .2 billion according to the July 6, Reuters report. This is only $300 million more than the Commercial Bank of China's IPO.(4)

• A changing economy and banking industry

Apart the size of the Chinese Agricultural Bank IPO, what the IPO of 'AgriBank' means is necessary fund raising according to a Bloomberg interview with Andy Mantel of Pacific Sun Investment Management Ltd. Moreover, Mantel states the bank doesn't just want to go public because it wants to, but because it has to raise money to finance its operations.(1) This is apart from the actual demand for shares of the Agricultural Bank of China.

If the Chinese economy is recalibrating itself to increase a consumer based market, then financing this growing economy implies more bank loans which requires more banking liquidity. The IPO of the Agricultural Bank of China plays a role in the capitalization necessary for this type of lending. Also, Andy Mantel states AgriBank and other major Chinese banks have billions of existing loans that could go into default.(1)

Once the Chinese Agricultural Bank hits the Hong Kong and Shanghai stock exchanges in mid July, prices of AgriBank's shares may decline.(4) Bloomberg has reported this has already happened with the three other major Chinese banks; ICBC, Construction Bank, and Bank of China are down an average of 9.32% for 2010, as of July. (1) If this trend continues, and depending on the lending standards held by Chinese banks, the corporations could be increasing market capitalization to finance defaulting debt in addition to a growing economy.

Sources:

1. http://bit.ly/9yXYsC  (Andy Mantel Interview)
2. http://bit.ly/9QyLB1 (CNN Money)
3. http://bit.ly/b5UZMR (Bloomberg)
4. http://bit.ly/aoUyDP (Reuters)

Are Consumers Being Lied to By Artful Marketing?

Marketing may seem like lying because that's how it might feel to be marketed to, but logically and technically, genuine marketing is not lying. Marketing is the practice of skillfully promoting a product or service to the consumer.

Marketing seeks to persuade potential and existing clients to acknowledge and act on addressing a need, or set of needs via the goods marketers offer. These consumers may have come to believe the goods are valuable from what marketing informs them of. However, value is a choice based on valid product information and not lies about what something will or will not do.

This is pointed out by the American Marketing Association (AMA) official definition of marketing. The AMA defines marketing as providing offerings that have value for consumers. Moreover, these offerings are created and communicated for and to clients by marketing entities. Philip Kotler, a well known marketing academic, reinforces this definition. Kotler defines marketing communications as being focused on the point of view of the customer.

Both the AMA and Philip Kotler place emphasis on consumers and what they value in their characterization of the practice of marketing. In light of this it would naturally follow that what the consumer believes is of importance to the practice of marketing. Therefore, marketing must, by definition, attempt to influence the beliefs of customers in regard to perception of products and services. Everybody knows marketers inform people of their wares so there is no lie regarding their intentions.

The difference between lying to the consumer and marketing to the consumer are that lies intend to deceive whereas marketing presents a case for consumers to consider using facts, ethics and utility as a premise.  Marketing informs people of how a product or service is useful, what it is and how it works without violating principles of professional conduct which generally involves not lying about a product or service.

The notion that marketing is the art of lying to the consumer is unsubstantiated because consumers can feel they are being lied to rather than actually being lied to. The feeling of being lied to arises out of suspicion of motive and not actuality of falsity. For example, a customer may think this: "Marketers seek to sell, therefore their intention is for me to buy. Hence, what they say is an effort to deceive me into thinking something I normally wouldn't." The  error in this thought is that the marketer merely promotes and does not intend to deceive.

Another reason marketing is not the art of lying to the consumer is that deception is bad form. Marketers who deceive do not ultimately gain strategic advantage with their clients if they are following standard marketing ethics. This does not mean all marketers don't lie, but it does mean marketing is not the art of lying to the consumer just because someone feels or was lied to by someone claiming to be marketing. Long term clients, repeat clients and viral marketing are simply not supported by deceptive marketing.

In conclusion, the alleged 'lies of marketing' is a misinformed stereotype regarding the industry of informing consumers of their options. If marketing was the art of lying to the consumer it wouldn't be called marketing it would be called lying, and corporations would have the lying departments instead of marketing departments. Moreover, the American Marketing Association (AMA) would be the American Lying Association (ALA) and academics across the world would be called professors of lying. The general consensus is that this is not the case and these organizations and individuals are formally recognized as marketers, and not liars.

Sources: 

1. http://bit.ly/axrgmx (AMA)
2. http://slidesha.re/dgHl4f (Slideshare)
3. http://scr.bi/bvzNTF (SCRIBD-ABN Ambro)

Pros and cons of the bait and switch technique

Bait and switch advertising is a method of generating business traffic for the purpose of introducing new customers to additional products that may otherwise have gone unnoticed or have otherwise been promoted less. Some forms of bait and switch are legal whereas other forms are not. Knowing the difference between legal and illegal bit and switch advertising, in addition to realizing when to use the bait and switch selling technique and with which product, is essential to its effectiveness as an advertising tool.

Pros of bait and switch:

• Promotes customer satisfaction

Legitimate reasons for a switch include being sold out of sufficient stock, showing a customer something they might also be interested in, and replacing or upgrading a product or service. These reasons are ways to improve customer satisfaction and service because they exemplify the willingness of the business to assist the customer identify a suitable alternative. For example, if a customer sees an advertisement for a cell phone then goes into look at that phone, their intent may only be to investigate the product further because they're in the market for a new phone. Switching sales assistance to different cell phones may improve this particular customers' shopping experience and research.

• Increases market exposure

Even bait and switch advertising increases market exposure. If a bait and switch campaign is considered negative and a company quickly follows up with clearer advertising, the net affect may amount to greater advertising leverage than had a standard advertising methodology been consistently used. In other words, the advertising itself can be bait and switch, starting with one type of ad to gain customers' attention and another to build on that attention.

• Higher sales

Bait and switch advertising can boost sales forecasts and can also do so on a consistent basis if 1. The method used is legal and 2. The product and market suit the sales tactic. In other words, some markets and products work better with bait and switch advertising than others. For example, unique brands such as Coach purses may not be as easy to switch with other brands however the purses themselves may be switched provided they remain the Coach brand. The use of market research can be highly useful in determining if and when a bait and switch marketing campaign is the right choice for your business.

Cons of bait and switch:

• Constitutes false advertising

The Code of Federal Regulations defines bait advertising as meeting specific criteria. Bait and switch advertising should generally not meet these criteria in order to avoid potential negative litigation. In light of this, variations of the bait and switch that do actually intend to sell the bait product in addition to switched products are safer and more effective than a traditional bait and switch.

• Reduces brand perception

Loyal, or long-term customers with specific advertising expectations may not value bait and switch advertising at all. They may perceive it as a breach of trust and non-recognition of their value to the company as long time customers. When using the bait and switch with such customers, it may be more affective to adapt the technique to a soft-sell or more personalized approach where the bait and switch isn't quite so defined. Market research is helpful in identifying client demographics, and preferences which can be used in determining whether or not a bait and switch is the right promotional choice.

• Could lower long-term revenue

Depending on a business and its clientele, a bait and switch advertising campaign could turn out to be a complete disaster. This is evident in a Pennsylvania State University Study about the bait and switch search engine advertising. In the study, 'piggyback products' are offered or advertised alongside search results for brand specific queries with the affect of lessening the impact of the original advertisers goals and paid for advertising. This is an instance of third party advertising using bait and switch.  

Sources:

1. http://bit.ly/aUTmKb (Federal Trade Commission)
2. http://bit.ly/19FIs0 (County of Los Angeles)
3. http://bit.ly/b64fVc (Law Brain)
4. http://bit.ly/8YiZLb (Edmunds)
5. http://bit.ly/aOO92Q (Pennsylvania State University)

How Goldman Sachs Has Been Tied to the Whitehouse

Goldman Sachs' (GS) ties to the Obama Administration are two fold. Financial contributions to Federal Government organizations and U.S. politicians of both parties is the first hand of Goldman Sachs ' business in the affairs of Washington D.C. The second hand is Goldman Sach's many former employees who hold, and have held rather telling positions in the government.

The facts that demonstrate Goldman Sachs is tied to the Obama administration are evident in the statistics of the watch dog group www.opensecrets.org.(4) At the top of the 2008 recipients list was Barak Obama followed by Hillary Clinton who jointly received over $1.4 million from Goldman Sachs.  In the 2010 cycle, and as of record on 4/23/2010, Michael E. McMahon, a House of Representatives member is the top recipient of Goldman Sachs funds. McMahon is also a sponsor of the Derivative Trading Accountability and Disclosure Act (H.R. 3300)

Of the Obama administration's employee links to Goldman Sachs are 4 former Goldman Sachs payroll recipients. The 'World Socialist Website' reports these Obama administration representatives to all be affiliated with the U.S. Treasury or U.S. Economic affairs. Specifically, wsws.org lists these people as being Mark Patterson, Jeffery Reuben III, Neel Kashkari, and Diana Farrell. All these individuals were instrumental in the financial decision making surrounding the federal bailout of Wall Street firms of which Goldman Sachs was a major recipient.(5)

The ties between Goldman Sachs (GS) and the U.S. Federal Government aren't really a new thing, as the relationship goes back several administrations. The ties between Goldman Sachs and the Obama administration isn't a one way one either. Former Government officials can also work for Goldman Sachs. One such example being Gregory Craig, former Obama White House Council according to Greg Gordon of McLatchy newspapers. This lawyer has allegedly been hired by Goldman Sachs to assist with the charges held against it by the Securities and Exchange Commission (SEC).

Of previous administrations' links to Goldman Sachs is Henry Paulson, who has not been linked to the hedge fund the SEC claims is fraudulent, and is the former U.S. Secretary of the Treasury as well as former executive of Goldman Sachs. In regard to the SEC case, its detailed are outlined by a Reuters report of Charles Whitehead of Cornell University Law School who states John Paulson, a hedge fund manager, may not have had a fraudulent conflict of interest with clients because independent responsibility for the hedge fund is also held by an organization called the ACA Capital Management Group. (3) In other words, the defrauding if any, was fault of ACA and not Goldman Sachs.

Other former Government officials who help positions at Goldman Sachs include Robert Rubin, the secretary of the Treasury during the Clinton administration was also a Goldman Sachs employee. The list doesn't begin or start with the Secretaries of the Treasury, it also includes several former high level U.S. Federal officials who have been affiliated with Goldman Sachs. Investopedia.com reminds us of these people, specifically William Dudley, Stephen Friedman, John Whitehead, John Corzine and Josh Bolton. (2) All these persons collectively worked an average of 23 years at Goldman Sachs, three of whom served for Federal or State Federal Reserve Banks and the roll doesn't end there. 'The Classic Liberal' website provides over 30 names of former Goldman Sachs associates that have also been tied to the White House. (6)

Whether or not the SEC's charges and the White House's connection to Goldman Sachs are related and serve some political end is a matter of speculation. What is evident is the fact the Obama administration and the previous administration is, and was indeed linked to Goldman Sachs. After the SEC made public its charge against Goldman Sachs (GS), the firm's common stock price declined sharply from over $180 to under $160 despite positive Q1 2010 earnings that beat analysts estimates.

Sources:

1. http://online.wsj.com/article/SB123897383937190973.html
2. http://tinyurl.com/4yay4qs (Financial Edge: Investopedia)
3. http://blogs.reuters.com/great-debate/2010/04/23/shorting-the-secs-case-against-goldman-sachs/
4. http://www.opensecrets.org/orgs/toprecips.php?id=D000000085&type=P&sort=A&cycle=2008
5. http://www.wsws.org/articles/2009/jul2009/gold-j15.shtml
6. http://the-classic-liberal.com/white-goldman-sachs-house/

Financial Grants for Displaced Homemakers

Social assistance grants are often filtered through agencies however individual grants do exist in the form of business and education funding. Good places to start looking for individual grant assistance are Charity Navigator and the Catalog for Federal Domestic Assistance. Several transitional programs exist that can help assist displaced homemakers and their families.

Complete article link: http://www.ehow.com/info_8494637_grants-displaced-housewives.html

Is the "Debit Card Rule" a good Idea?

In December of 2010 The Federal Reserve Board issued a press release that proposed balancing the cost of debit card transactions paid by retailers with costs required of card issuers. This is evident in the following excerpt from that press release:

 "The proposed new Regulation II, Debit-Card Interchange Fees and Routing, would establish standards for determining whether a debit card interchange fee received by a card issuer is reasonable and proportional to the cost incurred by the issuer for the transaction."

In response to this proposed rule, the Electronic Payment Coalition initiated a campaign to delay the implementation of this rule. The reasoning of the coalition is costs would be incurred by small financial institutions and debit card users to their disadvantage. This is because a bank or credit union may be considered a card issuer according to Bankers Online in reference to the Truth in Lending Act.

A question to ask when considering this issue is whether or not the motive of the rule is to establish a fairer or more balanced cost structure, or whether it is motivated by the intention to simply benefit retailers with lower costs.

Since the Federal Reserve Board is an economic regulator, the economic affect of this rule should be considered. If costs go up for small financial institutions and debit card users via higher fees, that could impact consumer spending. Moreover, if those financial institutions are required to initiate checking account and other fees to pay for debit card transactions costs, they may have less to spend in the economy. 

Lower consumer spending also impacts retailers so the reasoning for the rule may be circular.  In light of this it would seem the economic impact of the rule should be studied carefully,

Financial Documentary 'Inside Job' Reveals Shocking Truths About Financial Crisis

If you want to watch a movie about the real Wall Street, forget Oliver Stone fiction and watch 'Inside Job.' 'Inside Job', a 2010 film production Directed by Charles Ferguson is a candid look at the professional influences that led to the financial collapse of 2008. 

Revealing interviews and information about the financial network that extends from economic academics to Wall Street and government are presented in the movie. These interviews and narrative reveal how the inner workings of profit hungry motivations can skew high level and influential people whose decisions make them richer, but negatively affect the lives of millions of people on Main Street.

Trailer for Inside Job (2010)

The film starts out in Iceland, a former stable, wealthy, smooth running Democracy with low unemployment. Iceland fell into financial chaos with its deregulation, a storyline that is then transposed to the United States and the beginnings of financial crisis of 2008 which had its roots of deregulation as far back as the Reagan era. The story illustrates how what may have been a logical economic decision swung out of control when the wrong people got involved.

Many interesting characters are interviewed in this movie, however several others who form the basis for the movies premise were purported to have declined interviews. Some of those interviewed such as Glenn Hubbard of the Columbia Business School and former Bush Administration economic advisor seem to have been caught off guard with some of the questions and provide revealing, and priceless responses. 

These interviews alone add value to this movie and provide multiple angles regarding the cause and effects of the financial crisis. Among the individuals interviewed in 'Inside Job' are Eliot Spitzer, Andrew Sheng, David McCormick, Christine Lagarde, John Campbell, Emanuel Roubini, Glenn Hubbard, Charles Morris, Raghuram Rajan and more. 

'Inside job' provides good insight into the character and human related causes of the 2008 financial crisis, but largely covers old ground in terms of the financial reasons, causes and results. In some ways it echoes Michael Moore's 'Capitalism'. Nevertheless, the message is clear, and the point well taken by the time the movie is over. As Andrew Sheng says via paraphrase, toward the end of 'Inside Job', "real engineers build bridges, financial engineers don't, but get paid more."

What is lacking in 'Inside Job' is the other side of the story and a more context regarding the post-crisis period. Not all financial decisions are wrong, nor are all business people are bad and corrupt. Neither are all economists, academics and politicians. Unfortunately however, enough of them were either too gullible, powerless, naive or greedy to have been able to prevent millions of Americans from losing their livelihoods, homes and country. 

The perpetrators of these losses to the American people and others around the world were the same people who received golden parachutes, slap on the wrist fines, and were lying financial pundits, influenced a diluted financial reform and virtually non-existent criminal proceedings which followed in the wake of the financial crisis. This is one of the main points of the movie that as of October 31, 2010 had grossed over $600,000 in revenue according to the Internet Movie Database (IMBD). 

Sources:

1. http://bit.ly/awsRpr (Inside Job)
2. http://imdb.to/cOKTDr (IMBD)
3. http://bit.ly/9TPIz5 (Denver Post)

Is the European Economic Union Approaching a Fiscal Crisis?

It is a matter of numbers, specifically member state budgets, annual GDP, and financing of debt costs to name a few.

According to the European Commission Spring 2011 'European Economic Forecast', the Euro area's total debt ratio is 87.7 percent of GDP and forecasted regional growth of GDP is 1.8 percent in 2011. On the surface this seems manageable, but the possibility of financial issues spilling over into other Euro States presents a possible economic drag.

The European Commission report also studies the 'contagion affect' of sovereign member states and determines "The spill-over to non-peripheral member states is small and not economically relevant." This is in terms of national insurance cost on debt instruments i.e. credit default swaps which isn't exactly a complete and comprehensive measurement of risk.

So why does economics consider this a potential problem? What happens if Greece, Ireland, Portugal and Spain can't finance their cost of debt? According to the European Commission, it seems to present a manageable scenario. However, with a 1.8 percent GDP for the whole of the Euro zone, there is not that much room to maneuver financially. In other words, should default on debt occur within the Economic Union, what is considered 'not economically relevant' might be a potential economic hazard. 

Possible problems that occur with national default or bailouts:

1. Decline in the value of the Euro
2. Increased cost of debt
3. Need for additional bailouts
4. Lower EU GDP

European states that cannot finance their debt are at least a significant factor to an interdependent economic union. Bailing out member states that can't attain deficit reducing fiscal budgets pose an economic drag on those states that are able to manage their debt. The net affect may not be realized or priced into current economic statistics or securities prices. in such case, and if states such as Greece, Spain, Portugal and Ireland can't sustainably maintain debt costs, the potential of economic hazard appears real.

Fixed Asset Turnover Ratio: Details, Pros and Cons

The fixed-asset turnover ratio is good for measuring how long a company takes to pay off the cost of assets and how well businesses use assets in terms of revenue. Keep in mind how the fixed-asset turnover ratio is measured as the revenue time period and asset valuation method can significantly affect the ratio's results.

Complete article link:  http://www.ehow.com/info_8456971_definition-fixedasset-turnover-ratio.html

Japan's Economic Affect on Global GDP

According to Roubini Global Economics a 3 percent decline in Japanese Gross Domestic Product equates to a .3 percent reduction in global GDP. The Japanese economy officially entered a recession when it reported a second quarterly decline in GDP; Q1 2011 GDP declined .09 percent and an estimated 3.7 percent drop for the year according to Roubini.

Morgan Stanley forecasted a 4.2 percent global GDP for 2011 in May 2011, however this may not have included the Japanese GDP news that came out on the 19^th of May. If it does, that would make global GDP rise 3.83 percent assuming no previous pricing in. The World Bank puts 2011 real global GDP at 3.3 percent and the Conference Board estimates a 4.5 percent growth. This growth is good, however it is being driven by emerging economies.

Whether or not this will affect national economies such as the U.S. in a good way will be determined in part by how well U.S. Corporations are able to capitalize on international business opportunities where the growth is. A low U.S. GDP in 2011 would consequently seem to indicate an inability to take full advantage of those opportunities. The result of which will likely directly affect main street, employment and potentially business investment.

The U.S. Economy is forecasted to grow 2.6 percent by the Conference Board, however it also states Japan's 2011 GDP will be 1.7 percent. Perhaps this particular conference Board assessment is overly optimistic. The U.S. Economy is forecasted to grow about 2.9 percent according to a UPS assessment cited by Morningstar.

Why I Will Never Use Retaurant.com

I will never use Restaurant.com EVER because ("allegedly") $25 means $10 with minimum purchase of $20, not including 18% tip (for lunch) at somewhere I would not normally eat anyway.

PS: This violates the law of quantum physics, I feel I just entered a parallel universe called "Jack Assets Gift Certificates"

U.S. Home Vacancies Up One Percent Since 2006

One percent may not seem like a lot, but considering there were 128.023 million residential units in the U.S. in 2007 per the U.S. Census Bureau, 1 percent of that would be 128,023 units. It is interesting that rental vacancies have risen even more, as this indicates previous homeowners aren't necessarily renting.  

U.S. Rental & Homeowner Vacancies: 1996 to 2011 (in percent)
Source: U.S Census
	Rental Vacancy Rate				Homeowner Vacancy Rate
Year	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
2011	9.7				2.6
2010	10.6	10.6	10.3	9.4	2.6	2.5	2.5	2.7
2009	10.1	10.6	11.1	10.7	2.7	2.5	2.6	2.7
2008	10.1	10	9.9	10.1	2.9	2.8	2.8	2.9
2007	10.1	9.5	9.8	9.6	2.8	2.6	2.7	2.8
2006	9.5	9.6	9.9	9.8	2.1	2.2	2.5	2.7
2005	10.1	9.8	9.9	9.6	1.8	1.8	1.9	20
2004	10.4	10.2	10.1	10	1.7	1.7	1.7	1.8
2003	9.4	9.6	9.9	10.2	1.7	1.7	1.9	1.8
2002a	9.1	8.4	9	9.3	1.7	1.7	1.7	1.7
2002	9.1	8.5	9.1	9.4	1.7	1.7	1.7	1.7
2001	8.2	8.3	8.4	8.8	1.5	1.8	1.9	1.8
2000	7.9	8	8.2	7.8	1.6	1.5	1.6	1.6
1999	8.2	8.1	8.2	7.9	1.8	1.6	1.6	1.6
1998	7.7	8	8.2	7.8	1.7	1.7	1.7	1.8
1997	7.5	7.9	7.9	7.7	1.7	1.6	1.5	1.7
1996	7.9	7.8	8	7.7	1.6	1.5	1.7	1.7

* 2002a refers to revised numbers that reflect 2000 Census data.

Where did the people living in these places go? The Census statistics state persons per household have declined from 2.63 to 2.57 between 1990 and 2009. Yet household sizes across 7 categories have all increased since 1990 per the same source. The U.S. population has also increased by over 50 million since 1990. 

One possible conclusion to draw from this is that too many houses were built. In 1990 there were 91.9 million homes in the U.S., so 36.123 million homes were presumably built between 1990-2007. 

Keynes Vs Hayek Economic Rap

More anti-Keynesian economic sentiment evident in this rap. Hayak is of the Austrian School of Economics according to the Library of Economics and Liberty. Unlike Keynesian economics, Hayak's theory includes the consideration of human actions as a more integral part of the economic principles.  In other words instead of indirectly influencing things like employment through monetary policy i.e. interest rates and money printing, Hayak believed economic policy was better focused on individual motives rather than institutional ones.

Will Miramax Licensing Help Netflix Share Prices Rise Above $250?

Netflix share prices have grown dramatically since 2008, from near $17 a share to $236.94 as of May 17, 2011. The Miramax deal is a step in the right direction for Netflix but maintaining growth past 23 million subscribers might not be as easy as growing from a startup with just a few thousand members. Miramax licensing demonstrates the need for distribution rights in a competitive industry.

Complete article link: http://www.helium.com/items/2158431-netflix-streaming-video

Quantitative Easing and Central Banking Explained

The following two videos are critical of the Federal Reserve Bank and the Central Banking system, but differ a lot in their presentation styles. Both offer a reasonably good job of explaining how quantitative easing and central banking work. Two arguments made within the videos are 1. the central banking system endlessly prints money to essentially perpetuate a money making debt machine and 2. the Federal Reserve Bank comes up with excuses such as non-existent deflation to justify its monetary policy.

 

Without the Federal Reserve the economy and banking system would be closer to what it was prior to 1913 when the Federal Reserve Act was signed. This would give private industry as much power to manipulate the economy as the central bank has now. Neither system is perfect, one empowers private industry, and the other regulates the economy. However, it can be argued neither system acts in objectivity and both have the underlying goal of generating wealth which is human nature. Self-created catch-22?

Linked In IPO Expected to Raise Over $400 Million

LinkedIn Company is a young social media company that has soared to a global traffic rank of 17 in just a couple of years. This company's initial public offering date of May 19, 2011 is expected to raise approximately $405 million for the company to help it finance its revenue growth and market positioning as a leader of social media marketing and networking. Whether or not this website will go the way of Monster.com or MySpace.com is yet to be seen and depends largely on its ongoing utility and value to professionals around the world.

Complete article link: http://www.helium.com/items/2158149-linked-in-ipo

Why adults aged 30 and older are prime advertising targets

The Gallup Management Journal finds adults between 30-64 comprise the most affluent people in America. Older adults also comprise an increasingly larger amount of the population and have trillions of dollars in spending capacity. These and other factors have caused advertisers to rethink how they approach American consumers in order gain a greater amount of return on advertising dollars.

Complete article link: http://www.helium.com/items/2157835-advertising-to-older-adults

Why 401(k) plans with index funds can benefit employees

The New York Times reports 401(k) plan administrators are reluctant to incorporate index funds into their 401(k) plans. This is because the fees generated by mutual funds provide more income for fund managers. This may be a violation of fiduciary responsibility however, and disadvantage employees. There are multiple benefits to 401(k) retirement plans with index fund options can offer, this article provides a few of those reasons.

Complete article link: http://www.helium.com/items/2157731-reasons-401k-retirment-plans-should-invest-in-index-funds

Is A Return to the Gold Standard a 'Financial Trojan Horse'?

The following video was produced in the 1990's, a time when the U.S. economy was booming. It predicted a return to a gold standard would have a dramatic affect on the U.S. economy. This is because gold shrinks the money supply of an economy that basis the value of its currency on faith in that economy. 

Fast forward to 2011; the price of gold is over $1,400 per ounce and talk of a return to a gold standard has hit the airwaves. A May 16, 2011 article by Peter Morici of 'Enter Stage Right' called 'The risk of U.S. default and the return to the gold standard' is just one example.

The International Monetary Fund which holds $130.2 billion of gold at current prices uses 'Special Drawing Rights' or SDRs as another tool by which national banking systems can be managed by a global financial institution. These SDRs give the global financial system credit control as an 'international reserve asset'. The more financial strength is given to SDRs, the greater control management over that money has over global financial liquidity. 

If gold and financial strength of these types of institutions are used as leverage to exert non-voluntary  financial regulations on the global banking system, then a devaluing of the dollar helps that cause and may be a threat to the financial independence of nations.

The Ascent Of Money

Excellent PBS video on the history of finance and economics: 'The Ascent of Money'

Business Office Technology of The Near Future

Offices have undergone drastic changes in the last several decades from typewriters to computers, carbon copy to photocopy, from low level lighting to commercial fluorescent lighting and from hot humid offices to air conditioned worked environments. Technological advancements in the working environment will continue so long as technology can be affordably integrated into the commercial environment. Such changes are likely to occur in all types of industry including the service and manufacturing industries.

Technology advancements in the service industry

The service industry spans a large range of commerce and has become more important in the United States than the manufacturing industry. With changes in technology, employee demographics and skills, cost management and other work related factors, the service industry has already and will likely continue to adapt. A few changes that may continue in the service as a means of both optimizing work force, productivity and cutting office costs include the following:

• Telecommuting software

Several service industries already make use of telecommuting software. An example being the outpatient nursing business in which nurses visit patients and upload care management information via the internet using company provided software on information processing equipment. This allows the nurses to be more productive and affords them greater flexibility through saving time commuting to an office when they could be meeting client needs instead. Similar software is used in other industries and the telecommuting trend may rise to incorporate work life balance, non-standard work hours, lower office space requirements and so on.

• Energy efficient computing

Another area where change is occurring is in the area of computing efficiency. Since computers, servers and information storage devices use a significant amount of energy, the creation of energy efficient computing devices is a natural stage in the evolution of information technology. This can not only save companies on energy costs, but also help the environment.

• High capacity processors

The trend of higher capacity computer processors has been active for several years and has recently continued to be developed and improved upon in various ways whether it be higher storage capacity, greater speed, lower energy usage or smaller space requirements. The evolution of computer processors makes possible greater tasks, functions and capacity thereby improving the potential for computers in the workplace.

• Interactive Voice Communications

Teleconferencing has existed for some time now but may also develop further through combining internet capabilities with enhanced voice transfer capacity. Cell phones, internet, computers and telecommunications infrastructure may advance such that the a larger and faster facility is enabled and in doing so improve interactive voice communications in the office.

Technology advancements in the manufacturing sector

The manufacturing sector includes production of large equipment such as vehicles, conveyor belts, building supplies, electronic equipment, energy production and refining etc. As with the service industry, manufacturing is also able to benefit from advances in technology. A few potential developments that may emerge to a greater extent in the manufacturing industry are the following:

• Electronic Engineering

With more sophisticated computer programming, functionality and reliability, engineering may incorporate a greater amount of computer technology into various industries. For example, automobiles have already begun to incorporate computerized components, mining companies use computerized equipment to test geographical areas before mining and architects and engineers may continue to use in increasing ways, modeling software to test designs, strength, building requirements and adjustments for the purpose of saving time and energy in physical modeling and cost in terms of correcting potential problems via computer before they start in reality.

• Artificial Intelligence

Artificial intelligence involves computer hardware and software that is able to learn and integrate new information on its own without additional input from a programmer or user. This can enable computers to do more and become more flexible within industry thereby allowing humans greater capacity to perform higher level decision making tasks.

Other office technological advancements

Additional technological changes may span both service, manufacturing and other industries if not create new industries altogether. Two more examples of how progress in the field of technology may influence the commercial environment and future offices are the following.

• E-Commerce focused Information Technology

The internet has led to an expanding ecommerce environment in which brick and mortar companies have been replaced with warehouse delivery operations. In other words, the sales and marketing has shifted toward the internet placing less demand and revenue generation in the hands of traditional companies that service walk in clients. Consequently, offices may focus more heavily on ecommerce information technology in the future, and less on office designs and space suited to walk in clients.

• Digital Security

Security guards and surveillance cameras traditionally maintained Security. While these two forms of security are not disposable and will likely continue to be utilized in the future, other mechanisms of security may be integrated into total office security systems. For example, DNA scans may more effectively verify the identity of a person than the possession of an ID card or badge encrypted with scanning codes that unlock doors, computer programs etc.

Summary

Office technology is an aspect of the information age that is difficult to ignore. To stay competitive, profitable and meet commercial demands, technology continues to evolve and be innovated and in some cases be affordable enough to work its way through commercial and civilian environments. This has happened in the past and if the trend continues, progress into the future changing the face of the office environment again and again for many years to come.

Sources:
1. http://www.cfo.com/article.cfm/5621073
2. http://tinyurl.com/3rs6459