http://www.financialpost.com/most-popular/story.html?id=2631530
Summary
BMO (Bank of Montreal) has reported a three-fold jump in profit for the first quarter, well above market expectations. Due to the crisis the U.S. banks had, observers were concerned about the ability of the Canadian banks. But BMO proves them wrong and posted their net income from $225-million (or $0.39 per share) to $657-million (or $1.12 per share). Their credit loss was down by $53-million from the previous quarter. When there is ups there are always downs. According to the Bank of Canada, a major worry for the banks in Canada is the number of Canadian consumers borrowing because of household income. This is all because of the housing market going record high. Another worry/concern for BMO is that U.S. operation which continues to feel affect from the recession south of the boarder. Overall, BMO has made a huge improvement raising its net income and building a stronger interest margin.
Connection
Chapter four mainly focuses on Revenue Recognition. It is very important for a company to recognize their revenue and present it in their financial statements. BMO has proved to the market that they are capable of doing well. By generating accurate and reliable financial statements, BMO can bring in new investors and give them a clear understanding on how well the company is doing. It also gives the investors the chance to decide whether or not it is a good idea to invest in them. Some questions that investors may come across may be related to the Cash-to-Cash cycle. For example, revenue can be recognized at the time of production but may even be recognize at the time of collection. A risk investors have to face is that they have to believe that BMO's financial statements are accurate and reliable and that they are not manipulating them just to catch new investor's attention.
Reflection
If I was a investor, I think it would be a good idea to look BMO up. It's always a good thing to double check and make sure the company you want to invest in is safe and sturdy. You should never set your hopes too high because things do go wrong sometimes. Nothing is perfect. In the end, I think that BMO has improved a lot in their performance over the last year. If the statements are true, with their revenue it will cause the market shares to fly and get a lot of investors interested. I am sure that if any problems were to pop up, BMO will find and give a clear and reliable solution to the shareholders/investors.
