HOW DO CORPORATE PROFITS FLOWBY: PAUL YOUNG, CPA, CGADATE: OCTOBER 13, 2016

PAUL YOUNG, BIO

• CPA, CGA (1996)• Email: Paul_Young_CGA@Hotmail.com• Work Experience• 15+ years in Corporate Finance and Business Strategy• 11+ years building Financial Solutions• 8+ years in academia teaching advance public finance, advance

accounting and advance management information systems

AGENDA

• What are mutual funds• What are institutional investors• What are dividends• Investment decisions• Why do Countries Tax Income• How does tax income flow• Why is innovation important• Sample of Financial Statement

• Analysis of Revenue• Analysis of Cost• Analysis of After Tax income

MUTUAL FUND• What is a mutual fund• A mutual fund is quite simply a collection of stocks, bonds, or other

securities owned by a group of investors and managed by a professional investment company. When you put money into a mutual fund, it is combined with money from similar-minded investors. Source - http://www.globefund.com/centre/GettingStarted02.html

INSTITUTIONAL INVESTORS• What are institutional investors?

• An institutional investor is a nonbank person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed they are more knowledgeable and better able to protect themselves. Examples of institutional investors include pension funds and life insurance companies.

• An institutional investor is an organization that invests on behalf of its members. Examples include endowment funds, commercial banks, mutual funds and hedge funds.

Source: http://www.investopedia.com/terms/i/institutionalinvestor.asp

DIVIDENDS • What are dividends?• A dividend is a distribution of a portion of a company's earnings,

decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property

Source - Investopedia http://www.investopedia.com/terms/d/dividend.asp#ixzz4N0nwF2E6 

INVESTMENT DECISIONS• Personal Investor

• Retirement Plans (RRSP, TFSA, Bonds and other options)• Holding Stocks• Buying and selling stock

• Pension Funds• Goals

• Looking for business with solid returns• Portfolio different components

• Money Market• Foreign Holdings• Local Holdings

• Institutional Investors• Goals

• Will look at companies with a set rate of return (i.e. 6-8% or higher)• Will buy and sell chunk of shares to managed their returns

WHAT DO WE TAX?

• What do countries not tax wealth• If an investor has real estate and stock portfolio those holding are not

tax until they are sold• Capital Gains Taxation (based on selling of Wealth)

• What do Countries Tax• Income earn from different sources of income

WHAT DO TAXES PAIDSchools

Schools• Spending

• Teachers Salaries• Support Staff Salaries

• Role• Educate kids

Hospitals Hospital• Spending

• Salaries• Procurement

• Role• Cure the sickHospital

s Infrastructure • Spending

• Salaries• Procurement

• Role• Moved goods and people between different

destinations

Roads

Other Areas• Retirement – CPP,

OAS, GIS• Public Safety –

Police, Fire Military• Training/Skills

Development• Immigration• Other

Departmental Spending

WHY IS IMPORTANT TO SUPPORT INNOVATION• Innovation leads to business growth and jobs• Countries need to have the right policies

• Stock options• Corporate Taxation• Personal Taxation• Hydro Rates• R&D Credits• Trade and Foreign Investment Protection

LOBLAWS – SHARE PRICE

LOBLAWS – INCOME STATEMENTSales are generated by what customers will purchase from Loblaws

• Vendor purchases• Rebates• Volume

discount• Procureme

nt Cost• Employees• Consumers• Taxpayers

• Tax bodies• Corporate

Taxation• Payroll

Taxation• Consumptio

n tax

INCOME FLOW / STATEMENT OF EQUITYAnalysis• Loblaws paid out 416M

in dividends• Loblaws kept $144

million of earning for the business