Chapter 6 Blog

http://www.financialpost.com/news-sectors/story.html?id=1631822

Summary

This article reports on Chryslers recent drop in sales in the month of May compared to last year. Sales dropped a whopping 55% compared to the same month as last year. Chrysler filed for creditor protection in the United States on April 30. As a result of filing for creditor protection, its North American assembly lines are shut down as the court process continues. Cash is at a shortage for Chrysler and they are desperately finding ways to increase sales. On May 7, Chrysler introduced a new “pay break” program which offers to cover up to $500 of a buyer’s monthly loan payments for three months. This new “pay break” program has not made a significant difference in sales yet.

Connections

I connected this article to the internal control part of the chapter. With assets definitely declining for Chrysler, Management needs to make some key decisions on how to handle this problem, as Management is responsible for safeguarding the organizations assets. Properly handling Chrysler’s assets is very important if Chrysler wants to continue operating. Cash is a major problem for Chrysler as they are in a shortage of it. New policies and procedures are already being implemented by the Chrysler Management to protect their assets. The Chrysler Management needs to efficiently utilize the major assets of Chrysler to succeed these rough times.

Personal Reflection

I think that the next couple of months are very important for Chrysler. If sales do not increase for Chrysler, they could possible lose their assets depending on how much debt they are in. Managing is going to be critical if Chrysler wants to continue operating. Keeping expenses at a minimum and saving cash is what Chrysler will need to do. I feel that in the near future Chrysler financial position will improve slightly. I feel that their financial position will improve because they will have an increase in sales. I think that the consumer confidence in the automobile industry will rise somewhat, which will gain some much needed customers for Chrysler.