The economist expectation on inflation in Malaysia

The economist expectation on inflation in Malaysia Inflation in Malaysia is expected to remain low for the rest of this year due to weak exports and softer domestic demand. Malaysia is now experienced a deflationary pressure. Deflation is defined as a persistent fall in the average level of prices in the economy. In this case Malaysia is categorised as having a bad deflation. Bad deflation finds it source in the demand side of the economy. As the export trade and softer domestic demand is low due to lower oil and commodity prices, this will cause aggregate demand (AD) to decrease. A fall in AD will result in a decrease in the price level and a decrease in real output. Please refer to the diagram below. Diagram 1: Decrease in AD due to weak exports and softer domestic demand in Malaysia. Diagram 1 above illustrates the bad deflation situation. From the diagram above, we can see that AD shift to the left to AD1. A fall in the aggregate demand (AD) will result in a decrease in the price level from P1 to P2, and a decrease in real output from Y1 to Y2 . When there is less demand, businesses makes less profit or even loss. The producers need to cut down their cost of production by cutting down supply and lay off worker. Therefore, the level of unemployment will rise. This will affect economy badly. If more people are unemployed, their real income is low, thus their purchasing power will decrease, there will be even less consumption. This is proven from the article where it state that consumer price index  [1]  (CPI) in Malaysia dropped from more than 8% inflation in 2008 to two consecutive months to 2.4% in July 2009. This will lower the GDP (growth domestic product) level. Furthermore, the amount of investment from investor rely highly on their expectation of the economy climate for the future, if the consumer demand showing no improvement in the future, business confidence is likely to be low. Investor will refuse to invest in our country. This has negative implication for future economic growth. Deflation brought many impact on the producers, consumers and also the economy itself. In the situation of bad deflation, producer will faced with the risk generating low profit. This is because when the demand is low, it causes the price of product also low, they would not gain much profit and to ensure them not too loss too much, they will cut down the supply to increase the price back. They also tend to decrease the number of workers to save their cost of production. The consequences, of the producers actions are faced by consumers. When they are fired, their real income will remain low, hence, could not buy good as much as they want. Its indicates their purchasing power is low. And this illustrates the standard of living also at low level. Diagram 2: A decrease in AD and real output. These situations affect the economy badly. As we can see, in the Diagram 2, when the demand decreases from AD to AD1, price will also decrease (from P1 to P2) resulted in decreasing amount of real output from Y1 to Y2. To survive, producers tend to lay out workers to cut down cost of production. The unemployment level will increase. In the economy it is not good to have high level of unemployment as it will lower down the societys standard of living. Economic growth will decrease and economic development will be halted. From the explanation above, Malaysia should take immediate action to overcome bad deflation problems. Government could take actions such as by increasing the demand from consumer and increasing the aggregate supply. To increase AD, producers could promote their product by advertising or by giving a discount. The producer also could increase their workers income, as it can make them more motivated to works and produce high quality of product that meet the consumers taste. In a way, this could increase the aggregate supply (AS) as well. Government also could change to expansionary fiscal policy where it could encourage greater consumption by lowering income taxes to increase disposal income. Another way is by lowering the corporate tax so that firm could enjoy higher after-tax profit. The chances of them to lay off worker will be decrease. Therefore, the rate of unemployment will decrease. This is the best solution after all. (750 WORDS) ABSTRACT This article is about the economist expectation on inflation in Malaysia. They expected that inflation in Malaysia to remain low. There are several factors that contribute to this condition. First, it is due to weak exports and softer domestic demand because of lower oil and commodity prices. This condition is called deflation. There are two category of deflation; good deflation and bad deflation. As one of the Asia country, Malaysia experienced bad deflation. A fall in aggregate demand will result in a decrease in price level and a decrease in real output. If real output decreases, then it is assumed that the level of unemployment will rise, as firms will need fewer workers if there is less demand. Asian country has come out with several ways to overcome this problem. However due to some weaknesses. Only one method, which is investment liberalisation, would be the effective method in order to revitalized Malaysias economy and helps increasing the inflation rate.

Ford Motor Company Essay -- essays research papers

Ford Motor Company Address: The American Road Dearborn, Michigan 48121, USA Public Company Incorporated: July, 1918 Employees: 383,300 Sales: $62.17 billion Stock Index: New York, Boston, Pacific Midwest, Toronto, Montreal, London   Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Until recently, the Ford Motor Company has been one of the most dynastic of American enterprises, a factor which has both benefited the company and has brought it to the brink of disaster. Today Ford is the second largest manufacturer of automobiles and trucks in the world, and it’s operations are well diversified, both operationally and geographically. The company operates the worlds second largest finance company in the world, and is a major producer of tractors, glass and steel. It is most prominent in the US, but also has plants in Canada, Britain and Germany, and facilities in over 100 countries.   Ã‚  Ã‚  Ã‚  Ã‚  Henry Ford I, the founder of Ford Motor Company, was born on a farm near Dearborn, Mi in 1869. From boyhood, he had a talent for engineering, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. Ford’s superiors at the electric company felt his hobby distracted him from his regular occupation, and despite his promotion to chief engineer, he was forced to quit in 1899.   Ã‚  Ã‚  Ã‚  Ã‚  Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over numbers and prices of cars to be produced. Working independently in a small shed in Detroit, Henry Ford developed two four cylinder, 80-horsepower race cars called the â€Å"999† and the â€Å"Arrow†, with $28,000 of capital raised from friends and neighbors. Henry Ford established a new shop on June 16, 1903. In this facility the Ford Motor Company began production of a two cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.   Ã‚  Ã‚  Ã‚  Ã‚  Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet: these included the small, four cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2500). In October 1908, ... ...a 25% share of Toyo Kogyo in November 1979, when a Ford subsidiary merged with the company). Ford imported Mazda cars and trucks, and in many ways treated Toyo Kogyo as a small car division.   Ã‚  Ã‚  Ã‚  Ã‚  In 1984, with costs reduced, Ford started to repurchase 30 million shares (about 10% of the company’s stock). It’s production of cars in Mexico increased and output was stepped up in South Korea. The following year Ford introduced the Taurus, a modern full-size automobile which had taken 5 years to develop at a cost of $3 billion. The Taurus proved highly successful and won several design awards.   Ã‚  Ã‚  Ã‚  Ã‚  Sales and profits reached record levels in 1984, and in 1986 Ford surpassed General Motors in income for the first time since 1924. In addition, Ford’s market share increased to just under 20%. Ford Motor purchased several companies in the mid 1980’s, including the First Nationwide Financial Corporation, the New Holland tractor division of Sperry and 30% of Otosan, the automotive subsidiary of the Turkish Koc Group.   Ã‚  Ã‚  Ã‚  Ã‚  The Ford Motors Company was, is, and will continue to be one of the greatest American enterprises.

The Financial Performance of Microsoft

In 2009, Microsoft felt the impact of the recession and the difficulties that all businesses faced in responding to one of the most challenging economic environments in the past 100 years. The fiscal 2010 was a year of remarkable accomplishments with record revenue earnings per share reported. Outstanding determination across all businesses, maintained a disciplined approach to controlling costs, and proved deep commitment to smart investments in technology innovation. Since the company was created in 1975, Microsoft has created technology that transformed the way people worked, played, and even communicated all over the world. Their services and developments in hardware, and other solutions has opened new opportunities, greater convenience, and enhanced value to people’s lives. Microsoft profits from software licenses, and web based services like Bing, Windows Live, and Xbox Live services. In reviewing the year performance from 2009 and 2010 it is clear that revenue increased. Microsoft had much success in 2010 with the release of Windows 7, as well as PC market improvements. Operating income increased reflecting the change in revenue, offset in part by higher operating expenses. Sales and marketing expenses increased $335 million. This could be expected because of the increased advertising and marketing of Bing and Windows 7. General and administrative expenses increased $304 million and cost of revenue increased $240 million, primarily reflecting increased online costs and charges resulting from the discontinuation of the KIN phone, offset in part by decreased Xbox 360 console costs and reductions in other costs due to resource management efforts. Research and development expenses decreased $296 million, because of a decrease in third-party development and programming costs and increased capitalization of certain software development costs. Microsoft year ending 2010 reflects 380 million shares repurchased, an increase in earnings per share and an increase of net income. When viewing the performance of 2008 compared to 2009 it is clear that revenue declined across most segments due to the weak economic environment, which directly affected all markets. Many business experienced cut backs and layoffs, which caused a decline in demand for PC. According to Microsoft financial results the company had an increased server and server application revenue, reflecting recognition of deferred revenue from previously signed agreements and continued adoption of the Windows Server Platform and applications through SQL Server, Enterprise CAL Suites, and System Center products. Foreign currency exchange rates had a favorable impact of $486 million on revenue. In reference to the decreased operating income, it reflected decreased revenue. Operating expenses were flat with decreased general and administrative and sales and marketing expenses offset by increased headcount-related expenses, cost of revenue and employee severance charges. According to Microsoft’s calendar for first quarter results ending March 2011, financial performance dropped from the record-setting calendar fourth quarter results 2010. Earnings per share of $0. 61 were a 3-quarter low. First quarter has been an annual cyclical low for Microsoft for 3 years. Gross margin increased slightly but net margin decreased. Financial position continues strong, very liquid, and total assets are now just below $100 billion. Microsoft’s website has financial reports stating total revenues of $16. 43B, net income of $5. 71B, and earnings per share of $0. 61. From 2010 the fourth quarter total revenues were down -17. 67%, net income down -21. 13%, and earnings per share down -20. 78%. These results are shocking when compared to that same year’s fourth quarter, which these were up +13. 27%, +30. 60%, and +35. 56%, respectively. Financial reports state that first quarter of 2011, gross margin increased quarter over quarter to 76. 28%, but is still below historical 80+% range. Operating margin dropped quarter over quarter to 34. 75%, which is a 6-quarter low. Net margin dipped to 31. 85%, but is the 3rd consecutive quarter above 30%. Cash flow from operations per share increased dramatically to $1. 02 from the prior year’s fourth quarter (2010) of $0. 49. Most of the increase in cash flow was attributable to a decrease in accounts receivable. Total assets increased quarter over quarter +8. 4% to a record $99. 7B from the prior quarter of $92. 3B. The capital to assets ratio increased quarter over quarter to 53. 60%. The current ratio is a very liquid 66. 44%, which is a multi-year high. Microsoft reaffirmed operating expense guidance of $26. 9 billion to $27. 3 billion for the full year ending June 30, 2011. Microsoft also offered preliminary operating expense guidance of $28. 0 billion to $28. 6 billion for the full fiscal year ending June 30, 2012. Microsoft’s growth rates for total revenues show a decrease of -17. 7% in March 2011 first quarter results, after increasing for 3 consecutive quarters, by +10. 59%, +0. 97%, and now +23. 20%. Earnings per Share decreased -20. 78% in March 2011 first quarter, after increasing for 3 consecutive quarters, by +13. 33%, +21. 57%, and now +24. 19%. This first quarter has started Microsoft is starting out 2011 with a weak quarter, especially after the 2010 fourth quarter peak. It is important for Microsoft to direct the business focus towards the continuation of technological advancements and high-quality products and services to customers. Peter Klein said, â€Å"We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,† as chief financial officer at Microsoft he continues by saying, â€Å"Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications†. Microsoft must continue 2011 with their trend of developing innovative software applications and solutions to enhance and improve communication and aid business intelligence, with special attention to innovations for small businesses.

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