Agenda - Sluggish Growth - What are corporate profits - Market returns - Profit forecast - Canadian Corporate Profits - USA Corporate Profits - Pensions Issues

1. Corporate Profits – 2016
Outlook
By: Paul Young, CPA, CGA

2. Disclaimer
• This presentation discusses Corporate Profits

3. Paul Young - Presenter
Bio
• CPA/CGA
• 25 years of experience in Academia, Industry and Financial solutions
• Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

4. Agenda
• Sluggish Growth
• What are corporate profits
• Market returns
• Profit forecast
• Canadian Corporate Profits
• USA Corporate Profits
• Pensions Issues

5. Economic Growth

6. Corporate Profits
• Corporate profit, also called net income, is the amount remaining
after all costs, depreciation, interest, taxes, and other expenses have
been deducted from total sales. Profit is also referred to as
the bottom line, net profit or net earnings. The formula for profit is:
• Total Sales - Total Expenses = Corporate Profit

7. Market Value
Prolonged downturn: Most
concerning is the fact that Q1
will mark six consecutive
quarters of negative profit
growth for the S&P
500, a feature rarely seen
outside of a more widespread
recession. We’re not in that
camp with economic growth
expected to rebound to a
2.3% clip in Q2, but for equity
investors, the year-and-a-half
sideways slog in stock prices
has done nothing to help rich
valuations as forwardearnings
expectations have also stalled.

8. Corporate Profit Forecast

9. Canada Corporate Profits
Key Sectors:
1. Automotive
2. Food Processing
3. Forestry

10. US Corporate Profits

11. Pension Outlook
• Central States Pension fund key quote “That imbalance left the fund paying out $3.46 in pension
benefits for every $1 it received from employers. The shortfall has resulted in the fund paying out
$2 billion more in benefits than it receives in employer contributions each year”
• CNBC “ Underfunded pension programs in U.S. states, cities and municipalities are "three or four
times worse" than current government projections, said Joshua Rauh, senior fellow at the Hoover
Institution think tank. "The amounts of money [officials] are setting aside [for pensions] are far
short of adequate," Rauh told CNBC's "Squawk Box" on Monday. "Taxpayers are going to get pretty
soaked" when the time comes to make up the difference. In a Hoover essay, "Hidden Debt, Hidden
Deficits," Rauh argued U.S. public pension systems were actually running at a $3.4 trillion shortfall
in fiscal 2014 when "optimistic assumptions about future investment returns" contained in
government disclosures were tempered. "Most public pension systems across the United States
still calculate both their pension costs and liabilities under the assumption that their contributed
assets will achieve returns of 7.5 [to] 8 percent per year," wrote Rauh
• CFIB “Canadians have known for a long time that the public sector pension scheme is unfair to
taxpayers and small business owners, but it is also becoming clear that many public plans are
structurally unbalanced and in need of immediate reform. Based on evidence that is available from
Statistics Canada, Public Accounts and other sources, the unfunded shortfall for public pension
plans across the country likely exceeds $300 billion. That works out to $9,000 from every man,
woman and child in Canada.”

12. Corporate Tax/Business Issues
• OECD tax avoidance plan – (31 countries signed)
• Income tax reforms
• Hydro Rates
• Movement to wind and solar (higher utilities
• New Taxation
• Provincial Pension Plans
• Cap and Trade

13. Other Sources:
• Trade - https://www.youtube.com/watch?v=WN1ec-WCH3E
• Manufacturing Sales -
https://www.youtube.com/watch?v=_yhpKsCvUN8