Recession-Proof Church

Posted on December 7, 2008 by Roan Yong

6 December 08. City Harvest Church. Sermon by: Rev. Dr. John Avanzini

Brother John mentioned that the purpose of end-time wealth transfer is end-time harvest.

Genesis 47: 6, 27. The best land in Egypt was Goshen. This is how God recession-proof Jacob. Through Joseph, God bring Israel to live in Goshen and the Israelites prosper in the midts of famine throughout the land of Egypt.

Brother John invited the church-goers to shout “We are living in Goshen!”

Genesis 26: 12 – 15 (NLT). Isaac became rich, but he lost it all. He was cast away by Abimelech.
Genesis 26: 19 – 22 (NLT). Isaac had to move and dug well three times in order to succeed. Notice that Isaac puts Vocation first.
Genesis 26: 23 – 25 (NLT). Isaac succeeded in his first attempt to dug well, because he did his priorities right: (1) Then Isaac built an altar there and worshiped the Lord (Isaac putting God first); (2) He set up his camp at that place (Isaac putting his family second); (3) and his servants dug another well. (Isaac putting vocation last)

If we did our priorities right, even our enemies will make peace with us (refer to Genesis 26: 28 – 31), proclaimed brother John.

Brother John also likened the current financial crisis to Goliath. Since Goliath means “The one who tears (or strips) everything down”

1 Samuel 17:40. David took 5 smooth stone. Brother John asked “Why there are 4 extra stone?” 1 Samuel 17: 50 –> David kills Goliath with one stone. Brother John said it’s because Goliath has 4 relatives.

In 2 Samuel 21:1, we learned that there is another famine, just like in the days of Isaac and Jacob. In 2 Samuel 21:15 – 22, we learned the 4 giants (relative of Goliath) were killed by David’s men. According to Brother John, this indicates that God will not only bless pastors (prophet of God – like David), but also those who fought together with the pastor.
Brother John invited the church-goers to shout “We are giant-slayers!”
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That’s all for the sermon folks. City Harvest Church distributed smooth stone, or talking-stone according to brother John, to the church-goers. This smooth stone, like the one used by David, is the symbol of Giant-slayers (or Recession-slayers). I would like to invite you to rate this sermon:

Breaking The Curse of Debt

Posted on October 5, 2008 by Roan Yong

October 4, 2008. City Harvest Church. Sermon by Rev. Kong Hee

LOAN	DEBT
Loan is borrowed money that’s serviceable	Unserviceable
Invest in assets that appreciate	Invest in things that depreciate

Luke 16:13 (KJ21)

¹³No servant can serve two masters; for either he will hate the one and love the other, or else he will hold to the one and despise the other. Ye cannot serve God and mammon.”

Mammon is syrian God of Debt. The above verse means you can’t serve God until the power of Debt is broken down.

Deut 15:6 (NLT)

⁶ The Lord your God will bless you as he has promised. You will lend money to many nations but will never need to borrow. You will rule many nations, but they will not rule over you.

Deut 28:12 (NLT)

¹² The Lord will send rain at the proper time from his rich treasury in the heavens and will bless all the work you do. You will lend to many nations, but you will never need to borrow from them.

Psalm 37:21 (NLT)

²¹ The wicked borrow and never repay,
but the godly are generous givers.

Deut 15:6; Deut 28:12; Psalm 37:21 have one message: IT’S BEST NOT TO BORROW.

Proverbs 22: 6, 7 (NLT)

⁶ Direct your children onto the right path,
and when they are older, they will not leave it.

⁷ Just as the rich rule the poor,
so the borrower is servant to the lender.

This passage also taught us about debt. Average child nowadays, live under the blanket of debt. For example: a child lives under a house which is under 25 years mortgage; driven around by a car, which is under 7 years loan.

2 King 6: 4 – 6 (NLT)

⁴ So he went with them. When they arrived at the Jordan, they began cutting down trees. ⁵ But as one of them was cutting a tree, his ax head fell into the river. “Oh, sir!” he cried. “It was a borrowed ax!”

⁶ “Where did it fall?” the man of God asked. When he showed him the place, Elisha cut a stick and threw it into the water at that spot. Then the ax head floated to the surface. ⁷ “Grab it,” Elisha said. And the man reached out and grabbed it.

What is “a borrowed ax”? It is a debt.

Debt will weight you down;
Debt is heavy;
Debt break up family, marriages;
Debt is a habit lifestyle, it can makes you addicted;
Debt will take control your personal life.

Notice the miracle in verse 6. How to cut a stick when the ax already fell into the river?…Also how can throwing stick into the water can make a heavy ax float?…This means that God will use little to deliver abundance. The important thing is to GIVE to the Lord – similar to the parable of Elisha threw a stick into the river. Eventhough we are in desperate situation , we still need to TITHE.

Neh 5: 3 – 6, 11 – 12. God use Nehemia to cancel their debt. Our God is a debt-canceling God.

Avoiding Financial Fakery

Posted on August 19, 2008 by Roan Yong

You need to avoid what is known as aggressive accounting. However, rest assured that you don’t need CPA to uncover fraudulent financial statement. You only need to take note several red flags:

I. Declining Cash Flow

Over time, increases in a company’s cash flow from operations should roughly track increases in net income. If you see cash from operations decline even as net income keeps marching upward – or if cash from operations increases much more slowly than net income – watch out. This usually means that the company is generating sales without necessarily collecting the cash, and that’s BAD.

II. Serial Restructuring Charges

Be wary of firms that take frequent one-time charges and write-downs. This practice are open invitation to accounting hanky-panky because firms can bury bad decisions in a single restructuring charge.

III. Serial Acquirers

Firms that make numerous acquisitions can be problematic – their financials have been restated and rejiggered so many times that it’s tough to know which end is up.

IV. The Chief Financial Officer or Auditors leave the company

V. The Bills Aren’t Being Paid

Look for recorded income, but the customer paid on loose credit. Or in other words no cash – the customer has not yet paid for the product. You should track Account Receivable (A/R) relative to sales. On credit front, watch the “allowance for doubtful accounts”. If this amount doesn’t move up in sync with A/R, the company may be artificially boosting its results by being overly optimistic about how many of its new customers will pay their bills.

VI. Gains from investment

By itself is legal. However, the problem arises when companies try to boost their operating results – in other words, the performance of their core business – by shoehorning investment income into other parts of their financial statements.

VII. Pension Pitfalls

If a company winds up with fewer pension assets than pension liabilities, it has an underfunded plan. If a company has more than enough pension assets to meet its projected obligations to retirees, it has overfunded plan.

To examine a company’s pension plans, you need to zoom at several items on the footnotes of a 10-K filing, and look for the note labeled “pension and other postretirement benefits,” “employee retirement benefits,” or some variation. Then look at the line labeled “projected benefit obligation.” This is the estimated amount the company will owe to employees after they retire. Compare this with the line labeled “fair value of plan assets at end of year.”

If benefit obligation > fair value of plan assets then the company has underfunded pension plan and is likely to have to shovel in more money in the future, reducing profits.

VIII. Pension Padding

Pension-related income is a strange kind of profit. It’s not available to pay out to shareholders – it belongs to the pension plan. This income is not reliable, and you should subtract it from net income when trying to figure out just how profitable a company really is.

Go to the line in the pension footnote labeled either “net pension/postretirement expense,” “net pension credit/loss,” “net periodic pension cost,” or some variation. Companies usually break out the contribution of pension costs to profits for trailing three years.

IX. Vanishing Cash Flow

You can’t count on cash flow generated by employees exercising options. The amount is labeled “tax benefits from employee stock plans,” or “tax benefits of stock options exercised” on the statement of cash flows.

X. Overstuffed Warehouses

When inventories rise faster than sales, there’s likely to be trouble on the horizon.

XI. Change Is Bad

Another way firms can make themselves look better is by changing any one of a number of assumptions in their financial statements. Some of the things that can be changed:

Firm’s depreciation expense. The longer the depreciation period, the smaller the annual hit to earnings.
Allowance for doubtful account. If allowance for doubtful accounts doesn’t increase at the same rate as accounts receivable, a firm is essentially saying that its new customers are much more creditworthy than the previous ones – which is pretty unlikely.

XII. To Expense or Not to Expense

Companies can also fiddle with their costs by capitalizing them. Operating costs – such as office supplies, office rents, and so forth are expensed because they produce a short-term benefit. On the other hand, costs such as a new piece of machinery are capitalized – that is, their value is recorded as an asset that slowly declines in value over time – because they produce long-term benefits.

Financial Reporting: An Overview

Posted on August 17, 2008 by Roan Yong

Taken from The Five Rules For Successful stock investing by Pat Dorsley.

There are three financial statement that you need to take note:

The balance sheet is like a company’s credit report because it tells you how much the company owns (assets) relative to what it owes (liabilities) at a specific point in time. It tells you how strong the framework and foundation of the business is. It must be balanced at all times: Assets = Liabilities.
The income statement, tells how much the company made or lost in accounting profits during a year or a quarter. Unlike the balance sheet, which is a snapshot of the company’s financial health at a precise moment, the income statement records revenues and expenses over a set period, such as a fiscal year.
The statement of cash flows, which records all the cash that comes into a company and all of the cash that goes out.

Look at the statement of cash flows first when evaluating a company to see how much cash it’s throwing off, then look at the balance sheet to test the firmness of its financial foundation, and only then look at the income statement to check out margins and such.

Further details:

I. The Balance Sheet

The basic equation underlying a balance sheet is: Assets – Liabilities = Equity.

Current Assets = those likely to be used up or converted into cash within one business cycle, usually defined as one year. This includes: (a) Cash and equivalents and short-term investments; (b) account receivable

Comparing the growth rate of accounts receivable with the growth rate of sales is a good way to judge whether a company is doing a good job collecting the money that it’s owed by customers.

; (c) inventories. Look for inventory turnover = cost of goods sold (cost of revenue) / inventory level.

Noncurrent Assets = assets that are not expected to be converted into cash or used up within the reporting period. This includes: (a) property, plant, and equipment (PP&E). If we compare these number to the firms’ total assets, we can get a feel for how capital-intensive the firms are; (b)investment; and (c)intangible assets.

Current Liabilities = money the company expects to pay out wihin a year. This includes: (a) account payable; (b) short-term borrowings or payables.
Noncurrent liabilities = They represent money the company owes one year or more in the future. This includes: long-term debt.

Stockholders’ Equity. The only account worth looking at is retained earnings = profits – dividends and stock buyback. It is a cumulative account. Think of this account as a company’s long-term track record at generating profits.

II. The Income Statement

In a 10-K, you’ll usually see the income statement labeled as the “consolidated statement of income” or the “consolidated statement of earnings”. Important line items in the income statement indicated below:

Revenue, sometimes labeled as sales.
Cost of Sales = Cost of goods sold
Gross profit = revenue – cost of sales. Once you have gross profit, you can calculate a gross margin, which is gross profit as a percentage of revenue. Essentially, this tells you how much a company is able to mark up its goods.
Selling, General, and Administration Expenses (SG&A). Also known as operating expenses. You can get a feel for how efficient a firm is by looking at SG&A as a percentage of revenues – a lower percentage of operating expenses relative to sales = a tighter, more cost-effective firms.
Depreciation and Amortization
Nonrecurring Charges/Gains. Ideally, you’d want to see this area of income statement blank most of the time.
Operating Income = revenues – cost of sales and all operating expenses.
Interest Income/Expense
Taxes.
Net Income. It is the company’s profit after all expenses have been paid. This figure is less important than cash flow.
Number of Shares (Basic and Diluted). Ignore basic shares. Diluted shares, however, include security that could potentially be converted into shares of stock, such as stock options and convertible bonds.
Earning per Share (Basic and Diluted). This number represents net income = number of shares.

III. The Statement of Cash Flows

The cash flow statement is divided into three parts: cash flows from operating activities, from investing activities, and from financing activities.

From Operating Activities:

Tax Benefit from Employee Stock Plan. Employee compensation is generally tax deductible.
Net cash provided by operating activities. Also known as operating cash flow. Pay attention to this figure.

From Investing Activities:

Capital Expenditure. It represents money spent on items that last a long time, such as PP&E. Free Cash Flow = Opearting Cash Flow – Capital Expenditure.

From Financing Activities:

Issuance/Purchase of Common Stock. It indicates how a company is financing its activities.
Issuance/Repayment of Debt. It indicates whether the company has borrowed money or repaid money it previously borrowed.

Built to Spend

Posted on June 23, 2008 by Roan Yong

Human being is a social creature. Deep in our heart, our greatest need is to be acknowledged by others. That’s why the most cruel punishment is solitary confinement. Abraham Maslow, the famous psychologist, also rank “respect of others”, “confidence”, “achievement” high in his hierarchy of needs. This acknowledgements and respect from other human will form ego, or sense of pride of who we are, or high self-confidence.

One of the way to gain respect of others and satisfy one’s ego is by having money, money, and money. How would a person send “signal” to others that he has a lot of money?…Of course by wearing branded goods, luxuries, sports car, big houses, having trophy spouse (i.e. model WAG – Wife and Girlfriend), and other socially recognized stuffs. Thus, the world creates the urge to spend, from human basic need: to be admired, adored, acknowledged by others.

This unstopable needs to get acknowledgement will lead to uncontrolable spending and eventually trapped in a state of, as what Robert Kiyosaki said, “poor man’s mentality”. Instead of buying ”assets” that generates income like investments, a person with “poor man’s mentality” would spend on “liabilities” like fancy cars, luxury goods. If history can prove anything, then it would prove than mankind are built to spend, regardless how much money he had. For example: a gambler who wins lottery tickets will have the urge to show that he is successful and therefore spend his money to gain social status.

You can find the manifestation of the argument above in Newpaper today, which features a story of a jobless person who wins lottery ticket worth $390k, and lost it all within 6 months. For goodness sake, he is J-O-B-L-E-S-S, and yet he still spend as if he is a successful man. I’m sure he had “confidence” that he can win back all the money in another gambling system. I can only say, a poor man will remains as a poor man.