American Apparel

Question 1:
After examining the financial statements, it appears that the company is starting to decline in 2010 in the very first quarter. They were already having a lost from operations in the first three months of the year 2010. (http://investors.americanapparel.net/releasedetail.cfm?ReleaseID=471395) As you can see, although their net sales increased, their cost of goods sold and selling expense increased. They need to figure a way to solve that. Luckily, they made quite a lot of money in 2008 and 2009. The main reason why they are losing money is because their operating expenses increased a lot throughout the year. As you can see in the balance sheet (http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Qtr&symbol=US%3aAPP) there is a lot of left over inventory. Their gross profit, and total revenue dropped, therefore unable to cover the expenses occurring in the year. You can also see that their liabilities increased and there is an increase in "Accrued Expenses" in the liability section. "Current Portion of Long Term Debt/ Capital Leases" increased too, this is most likely because they tried to expand or purchased inventory.

Question 2:
I think the company should spend money mainly on Operating Acitvities to repay loans, interests, other expenses, and then try to sell off the left-over inventory. At the moment, they don't need to buy inventory since they have an excess amount. Another thing they could do is to expand. With all this money, they can take a risk and open a new store somewhere in the Asian countries, somewhere in the east. It doesn't seem like they need to invest in Investing Activities maybe purchasing new equipment to replace their old ones. I also disagree investing in Finance because it is not a good idea to take an extra risk when you are not making a steady profit. To improve the company, they need to find a way to lower their expenses and advertise their products. They should also do some research and development to attract new customers and make the old customers come back to shop again.

http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=app
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=Balance&stmtView=Qtr&symbol=US%3aAPP
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?lstStatement=CashFlow&stmtView=Qtr&symbol=US%3aAPP
http://www.marketwatch.com/story/american-apparel-reports-fourth-quarter-and-full-year-2010-financial-results-and-provides-business-update-2011-04-01

http://investors.americanapparel.net/releasedetail.cfm?ReleaseID=471395

Prince Rupert Property Sales, Value Down in the First Quarter of 2011

http://www.bclocalnews.com/bc_north/thenorthernview/news/119271759.html#


Summary:
On April 5, 2011, the BC Northern Real Estate Board released their first quarter results. After a close examination, it seems that the property sales have decreased compared to the first three months of 2010. By the end of March, they managed to sell 25 properties worth $4.3 million. But in 2011, they sold 35 properties for $6.3 million dollars. Not only did they sell less property than they did in 2010, the average selling price dropped from $207 893, to $171 909. As a result, they currently have 240 properties ready for sale, 9 more than last year.

Connection:
In the first quarter of 2011, real estate companies in Prince Rupert managed to sell 25 properties for a worth of $4.3 million, compared to last year, their sales dropped by 10 properties. A decrease in sales would mean that there would be a less inflow of cash from the operating activities because the operating activities section typically includes the cash flows that result directly from the sale of goods and services to customers. In addition to that, the average selling price of the homes this year in Prince Rupert has dropped by about twenty- thousand dollars, which means there would be decrease in their net income, consequently, they earned less money.

Reflection:
The real estate companies need to invest more money on advertising. They need to show the world the pros of living in Prince Rupert. This was how Canada attracted so many people back in the 1800s and 1900s. Personally, I would hate moving to Prince Rupert right now because I know nothing about it. All I know is that Prince Rupert is somewhere north of Vancouver, and not a lot of people live there. A factor that may have contributed to more people buying properties last year is because the economy improved since 2009. People wanted to buy houses before prices go up again. Another factor that could have contributed to the decrease in sales is because of the unstable weather we endured in the first two months. I remember where one day it was about nine degrees, and the next day, it was snowing and below zero.

CAE simulator sales expected to take off with sale of five units for $65 million

Summary
A global manufacturer has just sold another five aircraft simulators for $65 million dollars. The five CAE 7000 Series Level D full-flight simulators were sold to Qantas Airways, Shanghai Eastern Flight Training Centre, and to an unknown customer in India lifting its sale number to 22 for this fiscal year that ends in March 31. It is said in this article that the sale of aircraft simulators is going to take off in the coming year or so. The sale of aircraft simulators is a support of the statement that suggests air traffic is growing. Each simulator sold increases $13 million dollars to the revenue, which is about half a cent per share in net earnings. Industry analysts believe that CAE is heading in the right direction of selling over 25, their anticipated number, simulators this year. Cameron Doerksen of National Bank Financial believes that in the next cycle peak, CAE can exceed its last full flight simulator order peak of 37 in a fiscal period of 2008. CAE is also currently, a world leader in providing simulation and training services to the civilian and defense forces around the world. They earn revenues exceeding $1.5 billion a year, employing more than 7500 people at more than 100 sites and training locations in more than 20 countries.

Connection
This article connects to chapter three because of the gross profit and the earnings per share. Because their revenue is so high, in my opinion, it is the company’s major source of income; it is enough to cover the others costs to operate the business. As I have stated in the summary, their income of $13 million dollars per simulator increases about half a cent per share. To calculate the earnings per share, you need to divide the income by the number of common shares prominent during the period. If the number of common shares that show up changes, a weighted average number of shares must be used. The earnings per share figure expresses the amount of income earned during the period in relation to the number of common shares held by the owner.

Reflection
I am glad that airliners are buying new simulators. This gives me a sense of relief when I am on an airplane because I will know that pilots are training with up-to-date equipment. In the future, I think I would feel secure if I invested in this company because of its continuous development of aircraft stimulators such as helicopters, commercial airlines and etc. Although CAE is making a lot of money from the simulators, then again, they are doing a good deed by producing advanced aircraft simulators for pilots in training.