Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    Manage Your Own Career

    Clint EastwoodIn the late 1960s Clint Eastwood, Lee van Cleef, and Burt Reynolds all had careers in ascent. But only one shot to the top. As Eastwood observed he came back from Spain and the spaghetti Westerns. He quickly managed to direct and star in a genuinely good movie, Play Misty for Me. 

    Lee van cleef Van Cleef had been a co star for years as far back as High Noon mid 502 and Liberty Valance 1962.  But he found his niche as the flinty eyed co star with Eastwood in the second two spaghetti westerns.  But Eastwood came back to Hollywood and started directing. For whatever reason, van Cleef was not so calculating or simply lacked the star power. He continued to make mostly B movies and television series. 

    Burt Reynolds Before you accuse me of picking B actors for the example, about the same time Burt Reynolds landed a role in Deliverance and a star was born.  Great looks and an aw shucks personality so appealing that even Dinah Shore, a huge star from the 50s in her own right, fell for him.  A famous photo spread in Cosmo, dating Sally Field, he seemed to have it all. And then, well, you tell me. he continues to work but I have not seen him at the Oscars. Eastwood has gone from box office success to genuine Academy Award honors, now everyone wants to be in his movies, even Shawn Penn. 

    My point here is that you must seize the moment. Your two years here at A & M are important, make the most of them. I just earned my ten year pin as a full time college professor. And here are some observations.

    You must manage your college time to maximize your learning. More than one student is amazed at how quickly two years goes by.

    This is not time to hurry up. Accounting is a ladder, one course builds on another, no you cannot take combinations and intermed II at the same time. Remember a degree is not a movie ticket, you will be judged on your accomplishment and knowledge on the job. 

    Are you budgeting your time to be successful?  Do you have your own place to study at home? do you plan quiet time?  Believe it or not some students get up early when it is quiet at home, teenagers are never awake at 5 AM…

    Do you have a study buddy or study group, do all of you look out for one another if someone has to miss class?  Do you have the current text?  Have you purchased an outline from Schaum's or Gleim?

    Are you reading the business news, have you read the websites of San Antonio cpa firms?

    We will be discussing more ideas for your success, but you and only you can make it happen. 

  • Professor Elam

    Blago to Boycott his Impeachment Hearing, Daley Calls Him Cuckoo!

    Sometimes it is just not possible to parody reality. As we embark on our study of ethics, Il Gov Blago

    and his attorneys have announced that the hearings are unfair and that the politicians seeking to oust him just want to raise taxes. 

    Mayor Daley has called the Governor 'cuckoo', for a second time no less, nonest, read the link. 

  • Professor Elam

    Caroline a Done Deal, Royalty Reigns!

    Caroline Kennedy now appears to be a 'shoe in' for the NY Senate Seat. The Governor who came in amidst the Spitzer disaster has to run for election. Appointing Caroline will give him the Kennedy family support, and ahem money for support.  But upstate NY is apparently furious at being left out again, backlash, and sliding polls for the governor, gee this is no easy job. 

    I posed the question in ethics class about fairness.  Caroline has not even consistently voted in elections, much less run for anything or for that matter, actually run anything in her life. Her interviews have been an elocution disaster laced with ya knows and uh huhs.  But, she is the heir apparent of the Presidency deemed to be Camelot. I pointed out that the names don't change much on the national ballots, this is beginning to look like France in the 1780s, one is elevated to office by birth and privilege, not hard work, just ask Sarah Palin, or Hillary come to think of it who earned 18 M votes to Biden's mere 10,000, no not a typo. Yet now Jill Biden brags that Joe Biden could have had Hillary's job, one can only imagine Hillary fuming over that one….

  • Professor Elam

    Homework Manager

    Homework Manager is not set up yet, McGraw Hill is overwhelmed as school gets under way, I did not get this done the week before school started, my fault, be patient, i will post a URL here and on WEB CT when it gets done,for now the old fashioned way is in effect, pencil and big chief tablet….

  • Professor Elam

    It’s Official, California is Broke!

    California will suspend tax refunds, various welfare payments, and well I can't keep up with all this, click and read.  Next thing you know Californians may have to pay for their own botox…Oh yes, I looked again, California is also suspending student grant payments, swell for our business eh?

    I mentioned this a few posts back.  Arnold S was elected in a recall over former Gov Gray Davis as the state's finances worsened. Rather than really face the problem, Arnold caved to the  legislature and began spending again. Well here we are, or here they are. 

    Do you suppose many companies are considering re locating to California?  I don't think so. 

    I posed the question in my last post on this issue as to whether retailers would accept IOUs as cash. Well I was on the right track with that one, consider this quote. 

    State officials have already designed an IOU template, Chiang said, and have been negotiating with banks over whether taxpayers could cash or deposit them if they are issued. The state could be forced to pay as much as 5% interest on delayed tax refunds if they are not paid by the end of May, Chiang said.

    Gov Arnold is instituting such measures to conserve cash. Well this is getting, as we in academia like to say, academic. If a bank has to take an IOU as cash, think about the ramifications.  That means the bank will then be, paying depositor interest on an IOU?  Can you see the danger here?  No doubt the banks are really nervous. Here is why.  It is one thing to exchange IOUs within California, but suppose the depositor deposits a $100,000 IOU in the bank. Then the depositor writes a check for a loan payment to an out of state bank.  The California bank of course will have to provide real cash, not IOUs to say the Texas bank that received the check on the other side of the transaction. The California bank cannot do this for very long or it will run out of its own cash. Come to think of it, no doubt the negotiations are all about this next scenario. Josie Californian deposits her IOU. She writes a check to her cousin in Texas Maria Texan. Maria cashes the check in Texas. When Josie comes to visit her, Maria hands Josie the real cash. Clearly this would result in a 'run' on California banks to change IOUs into cash by whatever means. 
    Gee this is a mess……

    By 1976 New York City faced a similar situation. Again, the inability to negotiate a reasonable way out of their problems with city unions led to problems. Then New York City Mayor John Lindsay and successor Abe Beam asked for Federal Help. Initially Gerald Ford said no.  Then he relented. The City technically did not default but…. the comptroller of J C Penny spent a year there sorting out NYC's finances. 

    Accounting note. If an external CPA auditor concludes a company cannot meet its obligations over the next year, a going concern statement is issued. It means just that, the company cannot be expected or there is serious doubt, that the bills can be paid. If California had a certified audit, it would face a going concern dictum.  Gee am I glad we are in Texas…

  • Professor Elam

    GM Gets Serious about Cutting Costs

    Get ready to walk, inside the GM Renaissance Center after hours that is, the elevator is not working. 

    GM is finding lots of ways to cut costs.  We obviously study costs in cost accounting but hey it is a big factor in that income statement too. Read the article  to see how GM is cutting even dyno tests by using fewer models. 

    Another issue is lowering sales expectations, hmm do you suppose they have a lower than 10.5 M figure as the low end?

  • Professor Elam

    Accounting for Creativity, Case Study AAPL

    After saying he was staying Steve Jobs has announced he taking a medical leave of absence.  The stock price has dropped by more than half in the last year from 200 to 81, now below its 200 WEEK moving average. Mac laptop and iPod sales are slowing. Just how many new laptops and toys like iPhones and iPods do we need?

    But the question I pose is this. We are said to be a service rather than a manufacturing economy. Yet look at the balance sheet of any company. Is there account labeled TALENT?  Yes we can account for an intangible like a patent or goodwill, if we pay for it or acquire it. But talent, well the stock price can swell in its price earnings ratio which AAPL did. But the questions are

    How much is AAPL worth without Steve Jobs, how much of the creativity in a large company can be attributed to one person?  The answer will be reflected in the stock price, not the balance sheet. Have you thought about that as an accounting student?  Sports franchises rise and fall on the strength of their player roster, well, at least if they play well.  As the Dallas Cowboys recently demonstrated, that is not always the case. 

    Take a look at the stock price chart of AAPL, is it headed for 50 or 100?  Will that depend on their balance sheet, or whether folks think there is talent beyond Steve Jobs?  The market will let us know. 

  • Professor Elam

    IOU California

    The state of California is running out of cash, quickly.  How bad is it?  click to read that the state is planning to mail creditors IOUs as soon as Feb 1 instead of cash. Expecting a tax refund, sorry. Money from the state for performing medical services, hope. This happened in various cities during the Depression. A lady once told me of being paid in script by the City of Chicago in the 1930s.  Retailers soon accepted the script as actual money so life went on. It will be interesting to see if Californians have that faith in their future, ie, will the script IOU become accepted as money. After all we have a fiat money system at the federal level, it is only money because the government says so, there is nothing backing it up. So is there really any difference in California script and a federal reserve note. 

    You will recall that Gov Arnold S got elected amidst a financial crisis form the previous governor Gray Davis.  But the legislature did not change its ways.  Be glad you live in Texas…

  • Professor Elam

    Flint on the Bailout

    Jerry Flint has covered the auto industry since the 1950s, so I find his comments on its prospects quite interesting. While I am not teaching managerial accounting this semester, his comments figure heavily in what we study there. Here he comments on the viability of the bailout plan, as he and Rick Waggoner observed, it is hard to be profitable when no company is selling enough cars to be profitable. 

    Can Chrysler survive? For those of you looking for a good book to read, I suggest Iacocoa's autobiography which should be required reading in college business courses. But frankly when he took over chrysler things were a bit different. He had Mitsubishi to design a great 2.2 L turbo four, and came up with the mini van. Flint suggests that an alliance with VW or Nissan would work. If VW and Nissan had lots of time and money that suggestion might have some merit. But frankly I doubt we need three manufacturers of large pickups, do we really?  Next time a toyota tacoma pulls up next to you, it is the 'small pickup' ask yourself how many consumers, non commercial folks, really need a pickup larger than that, the answer is they don't. I think the real Achilles heel for Chrysler is their incredibly weak dealership network.  Walk into one, compare it with a Ford or GM dealership and you see what I mean. And as he says, cost cutting has left chrysler reliability, always a problem, even worse off. And right now there is simply no Chrysler economy car. A takeover would mean closing chrysler dealerships, why buy a Nissan or VW small car with a Chrysler badge on it?

    Actually there is one segment that Americans have that no foreign automaker has, commercial 3/4 to two ton vehicles. It might make more sense to me for a truck company, like Navistar, to acquire the Dodge Ram pickup line, they used to sell under the International brand, their own pickups and the original SUV, the Scout. As for the Chrysler cars, would anyone really miss them in a market swollen with over capacity?

    I doubt Bob Lutz, in his mid 70s, would leave GM….

  • Professor Elam

    Stimulus Ideas

    A Rep from Oklahoma puts forth some ideas on s stimulus plan. Note how many of these involved tax cuts or innovation such as NOT requiring withdrawals from an IRA. I find that CPAs are usually AWOL on making any such suggestions about what we ought to be doing. 

    Meanwhile Obama wants permission to spend the next $350 B, understandably Congress is reluctant to do that.