Canadian Business

Prices are sticky downwards - we all know it. Now Canada can witness it at its finest. Sure the Canadian and American dollars are near parity on the markets, but not at the retail cash registers. You will still find your self paying less for the same product in the United States or elsewhere. Canadians may now be wealthier in global terms, but the even exchange rate with the United States dollar now makes it immediately obvious that they also pay more than Americans for many goods.

A report released Thursday by BMO Nesbitt Burns, a unit of the Bank of Montreal, estimates that products are priced 24 percent higher in Canada than in the United States despite the Canadian dollar’s steady five-year march to parity with the United States dollar.

Retailers say there is a big lag time for events that affect pricing because most merchandise on store shelves was purchased six to 12 months ago. This obviously wouldn’t be the case, were prices to increase. Like I’ve said… prices are sticky downwards.

“For Canadians to believe that our prices will be at par with American prices under any circumstances is not realistic. Americans have 10 times the purchasing power. That’s the reality.” –Diane J. Brisebois, president of the Retail Council of Canada

Currency performance aside, Canadian retailers pay more for goods because their market is one-tenth the size of the United States, said Diane Brisebois, president of the Retail Council of Canada.

“We don’t suspect that the price differentiation will disappear ever, and that is simply based on economies of scale,” she said. “If you buy a dozen doughnuts you get a better price than if you’re buying a single.”

The real danger is how the Canadian economy will be affected by the Canadian traveling south of the border to do his/her shopping, and the American consumer who will no longer come to Canada to shop. How will we respond to this? …the challenges to an economy of prices being sticky downwards…

By Robin Trehan, B.A, MIB, MBA electronic business

Even a clock that does not work is right twice a day is a good statement and it is true that we do sometimes stumble on precious stone but the probability of it’s happening in business world is pretty dim. In this process business clock does not give the right time twice a day!

What is needed is a proper business analysis, and than one have an idea of what the business is worth. On this route financial analysis is of prime value. The following point need to be kept in mind while doing financial analysis-

• Is the company public or private entity?
• The business’s sales and earnings for the past five years?
• Salaries/dividends have been paid to owners and stockholders for the past years?
• Is the top management having very high salary and cashing out.
• How does the financial analyst perceive the company in case it is public company?
• In case it is private, what is the market image for it?
• The state of inventory? What is the normal inventory level, and where is it presently?
• Is there a redundancy factor to the inventory?
• The details of the accounts receivable and accounts payable?
• What loans are outstanding, to whom are they payable, and on what terms?
• What is included in accrued expenses payable, and what is the current amount?
• Are all taxes current?
• What overhead rates are used in determining costs?
• What are the company’s departmental budgets?
• Does the company own equity in any other businesses?
• What liabilities exist in connection with warranties?
• Are there any existing claims or known liabilities?
• Are there any contract disputes or negotiations?
• Are there any outstanding stock options or the like?
• How much is the working capital?
• How much is the current ratio?
• How much is the quick ratio?
• How much is the quick ratio?
• Debt/Worth Ratio?

Today’s preparation determines tomorrow’s achievement and it is very true if we want to enter into the game. Let’s the clock give the right time everytime!

Robin C. Trehan is an industry consultant in the field of mergers and acquisitions. He can be reached at robin@tafunds.com

Hilton Hotels Corp. [HLT-N] today reported that shareholders approved the company’s $20.1-billion (USD) sale to The Blackstone Group LP [BX-N].

Under the terms of the Hilton Hotels takeover/buyout, Blackstone will pay Hilton shareholders $47.50 per share in cash. Including assumed debt, the total deal is valued at $26-billion.

Shares of Hilton Hotels rose 14 cents to $46.12 during afternoon trading. Blackstone Group shares rose 23 cents to $23.88.

Hilton Hotels [HLT-N]

Blackstone Group LP [BX-N]

• Blackstone raised $4.1 billion in an initial public offering last month, the largest on Wall Street in five years.
• Beverly Hills-based Hilton Hotels operates more than 2,800 hotels in 76 countries. The company also manages or franchises brands such as the Hilton, Hampton Inn, Hilton Garden Inn and the Waldorf Astoria Collection.The company generated $8.11-billion in revenue last year.
• Blackstone already owns more than 100,000 hotel rooms in the U.S. and Europe under the La Quinta Inns and LXR Luxury Resorts and Hotels brands.
• On completion of the deal, Blackstone will become one of the largest hotel groups in the world.

In Canada, Hilton has dozens of properties, including a flagship hotel on Richmond St. in Toronto, and a popular Hilton Suites Markham Conference Centre and Spa.

“We certainly plan to grow and enhance the business, so things will stay more or less the same in Canada,” said John Ford, a spokesperson for Blackstone in New York.

Amid the current instabilities, I would still encourage one word: buy

Canadian-American dollar parity - more closer than we think? Well, the gap certainly seems to get smaller and smaller. Last week the Canadian dollar traded in Toronto at a new 30-year-high, at 97.04 cents USD. The last time the Canadian dollar traded so high against the US Dollar was mid-February 1977 - more than 30 years ago.

Part of the loonie’s growing strength recently is a result of strong demand for oil and metals amid strong global demand for those commodities. Another very important, and underrated factor, is the weakness of the U.S. dollar. The U.S. dollar has been very weak due the recent slowdown in the housing sector that has been spreading to other parts of the U.S. economy and worldwide.

For more information, see the effects of a high Canadian dollar.

Bad credit? Let’s face it… probably not the best time to refinance your home mortgage. Why? Probably because everybody’s labeling you a “risk”. Bad credit doesn’t necessarily need to stop you from refinancing your mortgage. There are still quite a few lenders out there who are more than willing to work with you to get you the refinance mortgage loan you need. If it works out perfectly, the refinance can lower your interest rate, change your monthly payments, and possibly provide you with cash at closing.

What does bad credit mean to your home mortgage refinance? Well, bad credit won’t necessarily stop you from approval for a refinance mortgage loan, but it will definitely affect the amount of interest you pay for the refinanced loan. The worse your credit, the higher your interest rate will be.

“Great! What am I waiting for?” Well, don’t jump off your seat just yet. A bad credit home mortgage refinance may sound easy after reading the above, but it does require some shopping and careful planning. Sometimes when you get a home mortgage refinance with bad credit, you end up paying more in interest than you would like. The last thing you want your refinance to do is get you further into financial trouble.

Get more information and apply to refinance your home mortgage with bad credit at Credit Consolidation Loans.

Canada has historically always been the number-1 seller of goods to the United States. China has now firmly eclipsed Canada for that position. This remarkable shift in trade reflects the Asian consumer goods juggernaut’s deeper penetration of the U.S. market. This also signals Canada’s special trading relationship with Washington is becoming… less “special”.

• China sold $312.2-billion (U.S.) worth of merchandise to the United States between Aug. 1, 2006, and July 31, 2007, while Canada shipped $305.6-billion, trade statistics show.
• The U.S. shipped $237.5-billion to Canada over the same 12-month period from August, 2006, to July, 2007, while it only sold $59.7-billion to China.

For the first time did China’s shipments to the United States surpass Canada’s. Lets face it… China is advancing at an incredibly fast pace. The safety/other issues of Chinese exports probably won’t stop them. And the Canadian dollar rising, is only making Canada less competitive in the U.S. So should Ottawa exert its efforts to open up new markets worldwide, or should it redouble its efforts on its existing relationship with Washington to keep borders open and dodge restrictions to bilateral trade?

Wait a minute… who said this is a bad thing. Maybe it’s something that needs to happen in order for growth and development to continue in Canada. Maybe this is a sign that Canadians are not willing to be “relaxed” and “laid-back” anymore, versus traditional beliefs. Maybe Canadians are tired of being bullied by the American economy.

• Canada has been growing in the financial services, engineering, telecom, etc. – where Canadian export strength has been growing.
• Canada has become less dependant on the U.S. market, with sales to the United States dropping over the past seven years.
• As a share of Canadian exports, sales to the U.S. have declined to 75 per cent from an all-time high of around 85 per cent back in 2000.

Maybe this is why the Canadian economy had been strong throughout the hardships in the U.S. economy during the past few years. Sure China is penetrating deeper into world markets, but more importantly, maybe we finally are heading towards a strong, diversified, Canada.

A short overview of different types of life insurance:

Although life insurance is purchased for yourself, your dependents are the ones who typically benefit from it. Life insurance provides your dependents with the security to protect the family home, should you die. The proceeds of a life insurance policy, known as the death benefit, provides the financial resources for the family home to continue to run as closely to normal as possible. The money that is realized from the life insurance also enables the family to repay any debts that have accumulated.

Term Life Insurance provides this protection for a specific amount of time. The term varies according to the policy and the provider. Typically, the policy is renewable upon the conclusion of a term. Terms can last for as little as one year and as long as twenty years.

The premium due on a term policy generally varies according to the individual’s age. Typically, the premium is a lesser amount in the earlier years of the policy. This is usually helpful to individuals who are younger and have a large amount of debt. The lower premium allows the individual to acquire a larger policy with a greater amount of coverage for what amounts to an affordable cost.

Permanent insurance policies go by several different names including Whole, Universal, Variable, Ordinary, and Adjustable. Permanent life insurance policies are designed to last for a long time. As long as the premium is paid, the policy stays in effect. If you don’t intend to hold onto the life insurance policy for a long time, it might be better for you to go with term insurance.

Many whole life policies feature a cash value. This is also referred to as a cash surrender value. In the event that the policy holder needs some ready cash and decides to turn in his policy, he can redeem it for the cash value that it has earned to date.

In order to determine which type of life insurance policy is best for you, consider your needs. Are you getting the policy to cover household expenses for remaining family? Do you want the policy to enable your spouse to raise your children in the family home in the event of your death? Do you want a term life insurance policy to be in effect simply to pay off your debts should you die? Think about these and other questions before deciding which policy is the right one for you.

That’s right… The CN Tower has been surpassed in height by a Dubai building, under construction. This means the CN Tower no longer holds the title as “the world’s tallest building”. The Burj Dubai, a US$4.1-billion hotel, business, and residential complex under construction in the United Arab Emirates, yesterday reached slightly above the CN Tower’s 553-metres.

The Burj Dubai is expected to reach even higher as construction continues, and a soaring 800-metres when finally complete. 145 floors have already been complete in the building, where a new floor is put up about every three days. The complete Burj Dubai is expected to have 165 floors.

The CN Tower held “the world’s tallest building” title for the last 31 years. Completed in 1974, the CN Tower cost $63-million CAD to build, and its construction took 40 months. The tower’s primary function is a broadcast transmission facility. The tower also has a revolving restaurant, and is one of Toronto’s main tourist attractions.

The CN Tower draws nearly 2-million visitors every year. The CN Tower is also recognized as one of the modern wonders of the world by the American Society of Civil Engineers.

More about the Burj Dubai:

• It will be situated on a man-made lake designed to wrap around the tower
• The building will be the first structure with the “world’s tallest” designation to include residential space
• The Burj Dubai is part of a new district in Dubai, which will cost US$22.7 billion
• The district will house 30,000 apartments and the world’s largest shopping mall

Some interesting facts about the CN Tower:

• More than 1,500 workers laboured five days a week, 24 hours a day to build it
• The structure was built to withstand an earthquake of 8.5 on the Richter scale
• It can withstand winds of up to 416 km/h
• Lightning strikes the tower about 75 times each year
• Its glass-cased elevators travel 22 km/h to reach the observation deck in 58 seconds
• On a clear day, visitors on the observation deck can see more than 160 kilometres (past Niagara Falls and across Lake Ontario to New York State)
• The tower’s glass floor section 113 stories above the ground can withstand the weight of 14 adult hippos
• The 360 Restaurant makes a full rotation every 72 minutes