Monday, October 12, 2009

Ch. 2 Philips Posts Unexpected Profit on Consumer Unit

http://www.bloomberg.com/apps/news?pid=20601085&sid=aAhnL9S2vhss

Summary

Royal Philips Electronics NV posted a profit in the third quarter as operating earnings at the consumer unit more than doubled. Its net income jumped to 174 million euros from 57 million euros in the year-earlier period. Amsterdam-based analyst at Kepler Capital Markets, Peter Olofsen, said that he was surprised because Philips are coming out of the recession more strongly than he thought it would be. In July, Chief Exective Officer Gerard Kleisterlee slash 6,000 jobs and said that he would cut even more expenses if necessary. Philips will focus its restructuring on the lighting and helath-care units next year. Also, the television unit's operating loss narrowed to 26 million euros from 73 million euros last year.

Connections

In Ch.2, the textbook talks about business transaction analysis and profits. It is important to a company to make decisions from business transactions to help improve earnings for the business. Philips has analysis transactions and made decisions on how to improve their profits. They saw that the expenses are a problem, so they cut of 6,000 jobs. They also have a plan on what needs to be narrowed down, for example, the television unit's operating cost. Philiphs have earned more profit in the third quarter period from increasing sale transaction and lowering expenses.

Reflections

I think it is important for businesses to do transaction analysis because it helps owners to understand what is the problem in the company. There are many big corporations that do transaction analysis because they use the analysis to help them make decisions. In the past, I've been to an accounting firm for career prep and I saw that some big companies' owners come to see how their business is doing. Those companies rely on accountants to help them analyze the transactions to decide what accounts are affected and by how much. Those companies are really sucessful because they understand the importance of transaction analysis.

3 comments:

  1. The point of business transaction analysis is to look back on decisions made to see the influence they have had on the company. I applaud Royal Phillips Electronics NV for making the choice to cut back on jobs/expenses after realizing that their expenses exceed their assets and profits. Companies who are able to analyze what they have done well and poorly on in the past are companies who are more likely to succeed, since they show initiative in correcting any mistakes they have taken. While it is a good idea to analyze transactions, take a risk here and there is a good idea as well. We learn from our mistakes and so too do companies.

    Betty Chan
    Financial Accounting12
    Day 1 Period 2

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  2. Transaction analysis is the process of examining transactions for entering into an appropriate account. This article reminded me the scandal of ex-president of Taiwan - Chan Shui Pian. He and his family had transaction counting to billions to overseas accounts in Switzerland, the United States and Malaysia. By the end of his reign, opposing parties found out and started to gather information on the scandal. They checked their transaction analysis and found many irregular transactions flowing between the overseas account to Chan's family accounts. This, I believe shows how importnat business transaction analysis are to the public, whether you are an enterprise, a public icon, or even in a normal household; transaction analysis lets us see and clearify where the money has gone to.

    Kate Wong
    Financial Accounting 12

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  3. I agree with you Vanessa, it is very important for companies to review their company’s achievements in order to keep a good idea of what’s going on in the company. It is important because not knowing what is happening to your company can further affect your company’s record down the road. It is similar to that of JA Titans. Our decisions are based on how our company did the quarter before. If we do not thoroughly read through our company’s statistics, we may make the wrong decisions, which will cause us to lose significant Performance Index.

    -Michael Li

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