http://www.vancouversun.com/business/minimum+wage+workers+falling+further+behind/2752317/story.html
Summary
In the past year, every province in Canada has had their minimum wage raised, all except the province of B.C. Nine years ago, B.C. used to have the highest minimum wage of any province when it was raised to $8 an hour while the elected Liberal government introduced the new training rate of $6 an hour. However, the eight-year freeze on minimum wage has resulted in B.C. having the lowest minimum wage in the country. On the other hand, Nova Scotia’s lowest-paid workers received a raise, and Ontario’s minimum wage was increased to $10.25, which is currently the highest minimum wage in the nation. Nova Scotia has now raised their regular minimum to $9.20 today and $9.60 in October, and has also raised its training minimum from $8.10 to $8.70.
Connection
Many may argue that in the perspective of the business, an increase in minimum wage would have a negative impact on the company. To compensate the rising cost of hiring new employees, employers may be forced to lay off several employees or cut back on their working hours. As the accountant, keeping track of payroll requires great responsibility because working hours as well as overtime hours have to be calculated. Based on the amount of taxable earnings and the employee's net claim code, the amount of income tax to be deducted can be found using a table. Businesses not only have to pay the employees a certain amount, but deductions that are taken from the employees, such as CPP, EI, RPP and health insurance, have to be correctly matched and remitted to the government.
Reflection
For a company, paying the employees is a major expense in the current recessive economy. With an increase in minimum wage, more of their profit will have to be used to pay the employees instead of increasing the profitability of the business. As a student working part-time, increasing minimum wage in B.C. sounds like a wonderful idea initially, but when we look deeper in the issue, this may not be the case. It is undeniable that people who are working a full-time job at $8/hour and have to support family are suffering from the low minimum wage and the increasing cost of living in B.C. However, if the minimum wage was increased, businesses will have to work harder to make a profit in the current economy, and as a result, they may increase the prices of their products to compensate for their increased payroll expenses with inflation.
Thursday, April 29, 2010
Monday, April 12, 2010
Shoppers drops on proposed pharmacy reforms
http://www.financialpost.com/story.html?id=2777670
Summary
On Thursday, April 8, 2010, the shares of Shoppers Drug Mart Corp. plummeted significantly, from $43.17 on Wednesday down 9.8% to close at $38.92 on Thursday. The dramatic fall in share price was due to the proposals published by the Ontario government, which stated that the province says it plans to reduce reimbursement rates for generic drugs from 50% to 25% of the branded drug cost. Shoppers CEO Jurgen Schreiber believes that these changes will negatively impact the success of the company in the future because the government is ignoring the reform proposals from the community pharmacy, and therefore risking the long-term sustainability of community pharmacy in the Province of Ontario. However, the changes appear to only have a temporary negative effect, as Mr. Schreiber states that Shoppers Drug Mart, with its leading market share, will adjust to the changes announced and reveal the successful players in retail pharmacy to be those with size, scale, and leverage efficiencies.
Connection
In Chapter 15, we learned about the different perspectives that a company would be judged from. For example, when the announcement for pharmacy reforms came out on Thursday, outsiders such as investors would judge the profitability of Shoppers Drug Mart based on its recent news. At the moment, several investors are considering to sell their shares of the company because for the short-term, the trend seems to follow the falling of share prices. Looking at the financial ratios of Shoppers Drug Mart, their financial position seems to have improved from 2009 as compared to 2008, as their current ratio increased from 1.62 to 1.29. Since the current ratio measures a business’s ability to pay its debts, a higher ratio indicates a company has a better change of paying off its debt because they contain a much greater proportion of assets than liabilities. However, the inventory turnover has risen since 2008, as the ratio decreased from 4.79 down to 4.77. This indicates that it takes longer for the company to deplete its inventory and the company would end up with excess inventory.
Reflection
As a result of the pharmacy reforms, Shoppers Drug Mart will have to reduce its pharmacy services and patient care in the province. With the imposed lower generic prescription drugs prices, the Ontario government hopes to maintain or lower its health care costs. Due to the announcement outbreak on Thursday, it is difficult for the financial ratios of Shoppers Drug Mart to reflect these changes until April 28, when the financial report for the first quarter of 2010 will be released. Reports showed that some pharmacies refused to fill prescriptions for their patients for one hour on Wednesday, which I find irresponsible for the pharmacies because they are holding the patients hostage for something they cannot control. After the store warned that they will cut back on staff and opening hours, I think some patients may begin to turn away from Shoppers Drug Mart and instead turn to smaller unaffected pharmacies. However, it seems likely that Shoppers Drug Mart will be capable of returning back to its original share price in the long term, after the changes in pharmacy reforms have been settled.
Summary
On Thursday, April 8, 2010, the shares of Shoppers Drug Mart Corp. plummeted significantly, from $43.17 on Wednesday down 9.8% to close at $38.92 on Thursday. The dramatic fall in share price was due to the proposals published by the Ontario government, which stated that the province says it plans to reduce reimbursement rates for generic drugs from 50% to 25% of the branded drug cost. Shoppers CEO Jurgen Schreiber believes that these changes will negatively impact the success of the company in the future because the government is ignoring the reform proposals from the community pharmacy, and therefore risking the long-term sustainability of community pharmacy in the Province of Ontario. However, the changes appear to only have a temporary negative effect, as Mr. Schreiber states that Shoppers Drug Mart, with its leading market share, will adjust to the changes announced and reveal the successful players in retail pharmacy to be those with size, scale, and leverage efficiencies.
Connection
In Chapter 15, we learned about the different perspectives that a company would be judged from. For example, when the announcement for pharmacy reforms came out on Thursday, outsiders such as investors would judge the profitability of Shoppers Drug Mart based on its recent news. At the moment, several investors are considering to sell their shares of the company because for the short-term, the trend seems to follow the falling of share prices. Looking at the financial ratios of Shoppers Drug Mart, their financial position seems to have improved from 2009 as compared to 2008, as their current ratio increased from 1.62 to 1.29. Since the current ratio measures a business’s ability to pay its debts, a higher ratio indicates a company has a better change of paying off its debt because they contain a much greater proportion of assets than liabilities. However, the inventory turnover has risen since 2008, as the ratio decreased from 4.79 down to 4.77. This indicates that it takes longer for the company to deplete its inventory and the company would end up with excess inventory.
Reflection
As a result of the pharmacy reforms, Shoppers Drug Mart will have to reduce its pharmacy services and patient care in the province. With the imposed lower generic prescription drugs prices, the Ontario government hopes to maintain or lower its health care costs. Due to the announcement outbreak on Thursday, it is difficult for the financial ratios of Shoppers Drug Mart to reflect these changes until April 28, when the financial report for the first quarter of 2010 will be released. Reports showed that some pharmacies refused to fill prescriptions for their patients for one hour on Wednesday, which I find irresponsible for the pharmacies because they are holding the patients hostage for something they cannot control. After the store warned that they will cut back on staff and opening hours, I think some patients may begin to turn away from Shoppers Drug Mart and instead turn to smaller unaffected pharmacies. However, it seems likely that Shoppers Drug Mart will be capable of returning back to its original share price in the long term, after the changes in pharmacy reforms have been settled.
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