Nissan 370Z Roadster & Nismo 370Z

Luxury Autos not so far out of reach…

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Accounting (Auditors) 101

When you hear “accounting“, what are your first thought? More times than not, I’m going to bet that your first thought involve something related to “taxes”. But, accounting is much more than that.

There is public accounting and then there is private accounting. In public accounting accountants generally provide services to multiple companies, whereas in private accounting you typically provide services to one firm. Public accounting firms include the Big 4 – PwC, Deloitte, Ernst and Young, and KPMG and other mid-tier and  local firms. Private accounting is usually internal; meaning companies like AAPL or NFLX will have accountants working in their own accounting department. 

Nowadays it seems like everyone who holds a financial reporting position has a CPA or is encouraged to become one. I’m in the process of submitting my initial licensing fee for the CPA and then I will be officially a CPA, but I digress.

Q: Who are accountants?

A: We are financial statement auditors, tax professionals, internal audit, consultants, and much more.

Q: What is the difference between PwC, Deloitte, EY, and KPMG? 

A: The biggest difference between the Big 4 is by far the culture. Generally speaking, all the Big 4 firms provide more or less the same services. Meaning they all provide audit, tax, and some form of advisory services. Correct me if I am wrong and I could be as I have not worked at all the Big 4 (only one), PwC I would say is more mellow of the four. Largely known for having more knowledgeable staff members. Part of this is probably due to the fact that staff members are up for promotion after three years versus two in the other Big 4. Deloitte is where more of the hip people are. They party hard and work hard. They’ve been doing quite well this past year and actually surpassed PwC in total revenue. I would say there is a good balance between knowledgeable individuals and those that enjoy partying. Ernst and Young is more serious than I would say Deloitte and KPMG. KPMG is known to be more outgoing than the other Big 4. They party harder than all of the other Big 4.  

Q: What is the difference between Big 4 accounting firms, mid-tier and local firms?

It comes down to the type of clients. Big 4, in aggregate, have all the Fortune 500 companies as clients. If not, they have the majority. Mid-tiers usually have more private companies with lesser market capitalization as clients than the Big 4. Local firms have more governmental organizations as clients than Mid-tiers and Big 4. 

Q:What do accountants do? 

I can only speak for audit. Here is a day in a life of an auditor. I’m considering doing a tax rotation, so when/if that pans out I can do a day in a life of a tax professional at a Big 4 as well. 

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Dangdang.com (DANG) Takes NYSE by Storm – Other Chinese IPO Stocks to Follow

Since 1999, Dangdang.com has been focusing on selling books via e-commerce methods in China. Inspired by unorganized New York bookstores, Peggy Yu and her husband started Dangdang.com in hopes of creating an organized online bookstore. Since then it has become the largest bookseller in China and that is taking into account both stores online and brick and mortar shops. 

This was done through understanding the customer’s needs and wants. Also, Peggy reduced the learning curve through learned lessons from other existing companies such as Bertelsmann book club and Amazon. However, Amazon has since entered the market through an acquisition of a local Chinese company (Joyo).

With all this hype, last year (2009) Dangdang made a mere $2.5M USD profit. It also recorded losses in 2007 and 2008. Dangdang faces tough competition with other top online retailers including Vancl. While its competitors have focused on building market share, Dangdang has been focused on making profit. Despite all of this, stocks were up 87% today from its IPO offering amount of $16 USD.

If anything, I’d imagine you’d want to play the hype. In that case, Lentuo International Inc. (LAS) and Sky-mobi Ltd. (MOBI) are due to sell shares tomorrow. LAS is an Chinese auto dealer and  MOBI is a Chinese mobile application company. LAS posted a profit of approximately $10M USD last year. Whereas MOBI posted a loss of $8M USD.

Disclosure: I do not own DANG for my accounts. 

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Link Listing made possible by Odette Yustman

Alright so, the real reason I made this post was not so I could post a bunch of links that you may or may not click on. It is just to post Odette’s picture. Maybe this will make our Monday brighter.

Stock Trading Links
Dissecting Declarations, Ex-Dividends And Record Dates

Capital Gains Tax Rate Hike And Its Impact

Minimalism in Trading an Interview with Everett Bogue

Life Lessons Links
Six Keys to Being Excellent at Anything
Who Needs Marriage?
Regrets of the Dying
My Name Is Khan.
How Will You Measure Your Life?
Learned Optimism

Entertainment Link
Watch Sports Live
Chef Holli’s Recipes

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What does ZAGG stand for? (Zealous About Great Gadgets)

Essentially, ZAGG’s primary source of revenue is from selling protective covers for electronics devices.

ZAGG’s strategy involves providing alternatives to bulky protective cases. Not only that but they allow you to customize the design of such protective “skins”. To me, they look more like protective films, which leads me to believe there are few barriers to entry. More on this later. 

Sales are made through their website as well as indirect channels (“big box retailers, domestic and international distributors, independent Apple retailers, university bookstores and small independently owned consumer electronics stores”) Indirect channels of distribution accounted for 58% of 2009 sales, while website sales accounted for 29%. About 4% of net sales was generated from shipping charges.

ZAGG has managed to increase sales from $19.8M in 2008 to $38.3M in 2009. It is anticipated that this year will be even better. This is based on the belief that in 2010 there is increased demand from products such as the iPad. Although their gross profit margin was approximately 57% of sales. Their net income as a percentage of sales was only 8.8% in 2009.

ZAGG will continue to experience increased competition as Bestskinever, Protechy, and BodyGuardz try to steal “market shares” from ZAGG. None of the aforementioned competitors are publicly traded, therefore it is difficult to find comparatives. For now, it seems that as long as ZAGG can maintain it’s market share, it will continue to be a leader in these type of product sales.


As of March 2010, ZAGG has not packaged their product along side any manufacturer’s electronic devices. There is potential to do so and in doing so, their product brand will be more well recognized and could lead to an increase in sales.


Disclosure: I do not own ZAGG for my accounts. 

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