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Ex.2. Imagine that you work as an accountant for a big enterprise.




Answer the following questions:

1. Do you total the accounts at the end of the fiscal year?

2. What are your usual activities at the end of the fiscal year?

 



3. When do you prepare a financial statement?

5. Why should you have more assets than liabilities? Does the accounting

department work on taxes?

6. What is the difference between your gross salary and net salary?

7. Is the difference between gross salary and net salary big in this country?

What does this difference depend on?

Ex.3. Make up the dialogue about accounting:

a) between an experienced accountant and a university graduate;

b) an employer and an experienced accountant-applicant.

Ex.4. Translate from Russian into English:

1. Бухгалтерский учет представляет данные для кредиторов и

вкладчиков.

2. Они готовят отчет о доходах и балансовый отчет в конце

финансового года.

3. Мы определяем эффективность производства с помощью анализа

коэффициентов.

4. Недвижимость является собственностью корпораций.

5. Мы проверим актив и пассив и определим стоимость имущества за

вычетом обязательств.

6. Мы платим большие налоги.

7. Сколько ты получаешь без вычетов?

 

Grammar Exercises

Ex.1. Make the sentences negative:

Model: I worked as an accountant in a big corporation.

I didn't work as an accountant in a big corporation.

1. An accounting department reported on the effects of the transactions.

2. They studied carefully income statement and balance sheet.

3. We used ratio analysis to determine the firms operating efficiency.

4. The accountants checked the assets and liabilities.

5. The accounting department provided data for the management.

Ex.2. Put up for questions of different types to each sentence (general,

special, disjunctive, alternative):

Model: The accounting department regularly prepared the income

statement and balance sheet.


1. Did the accounting department regularly prepare the income

statement and balance sheet?

2. What did the accounting department regularly prepare?

3. The accounting department regularly prepared the income

statement and balance sheet, didn't it?

4. Did the accounting department prepare the income

statement or a financial statement?

1. The board of directors checked out assets, liabilities and net worth.

2. He worked as a controller of the company for two years.

3. The applicants sent their resumes and letters of interest.

4. He used to do books in a big company.

5. Some governmental corporations issued stock certificates.

 

LESSON 7

CORPORATE FINANCE

Text

Corporations need financing for the purchase of assets and the payment

of expenses. The corporations can issue shares in exchange for money or

property. Sometimes it is called equity funding. The holders of the shares form

the ownership of the company. Each share is represented by a stock certificate,

which is negotiable. It means that one can buy and sell it. The value of a share

is determined as the net assets divided by the total number of shares

outstanding. The value of the share also depends on the success of the

company. The greater the success, the more value the shares have.

A corporation can also get capital by borrowing. It is called debt

funding. If a corporation borrows money, they give notes or bonds. They are

also negotiable. But the interest has to be paid out no matter whether

business is profitable or not.

When running the corporation, management must consider both the

outflow and inflow of capital. The outflow is formed by the purchase of

inventory and supplies, payment of salaries. The inflow is formed by the sale

of goods and services. In the long run the inflow must be greater than the

outflow. It results in a profit. In addition, a company must deduct its costs,

expenses, losses on bad debts, interest on borrowed capital and other items.

It helps to determine if the finance management has been profitable. The

amount of risk involved is also an important factor. It determines the fund

raising and it shows if a particular corporation is a good investment.

 


 

purchase

payment of

expenses

property

equity funding

 

debt funding

 

holders of the

shares

stock certificate

negotiable

 

net assets

bond

note

interest

to run a

corporation

inflow

outflow

inventory

 

supplies

goods

fund raising


Active Vocabulary

покупка, приобретение

оплата расходов

 

собственность, имущество

акционерный (долевой) способ образования

денежного фонда предприятия

образование денежного фонда предприятия с

помощью займа

держатели акций

 

сертификат акций

оборотный, могущий быть переуступленным,

купленным, проданным

стоимость имущества за вычетом обязательств

долговое обязательство, облигация

зд. долговая расписка

доля, фиксированный процент

руководить корпорацией

 

приток, поступление (денег)

отток (денег)

материально-производственные запасы, инвентарь

зд. ресурсы

товары

финансирование, привлечение капитала

 

 

Comprehension Questions


1. Why do all corporations need financing?

2. What does equity funding mean?

3. What does debt funding mean?

4. How is the value of a share determined?

5. What activities produce an inflow and outflow of capital?

6. What can happen if an enterprise has a greater outflow of capital than an

inflow?

7. Why is the risk involved important in determining fund raising?

 



Vocabulary Practice

Choose the necessary word and put it in the sentence:

1.... funding is a financing formed by borrowing.

2. They have borrowed much money and they have to pay

a big....

3. Financing by shares is called... funding.

4. That is a very profitable deal, for that purpose we need

extra....

5. You can sell your shares and.... They are ….

6. The current assets of a company usually include cash

and....

7. As a result of this deal we'll have greater... than

outflow.

 

Dialogue


 

 

a. equity

b. negotiable

c. interest

d. inventory

e. funding

f. inflow

g. bond

h. debt


Mary: It' s so nice to see you, Frank. Sorry, I couldn't come to your office

today.

Frank: Never mind. Have a seat. Let's start by having some coffee.

Mary: So, Frank, I guess it might be right time for me to invest in that

computer company. As my stockbroker, what can you suggest?

Frank: I am sure they are doing extremely well and they would welcome

your investment.

Mary: But why do they need my investment if they are doing so well?

Frank: O.K. I think I should explain you a little about a corporate finance.

Mary: Go ahead. If it concerns my money I am always interested.

Frank: If a corporate enterprise wants to expand it needs financing.

Mary: You are right.

Frank: So, there are two basic types of financing: equity and debt.

Mary: What's the difference between them?

Frank: If the money is supplied by the owners of a business it is called equity

funding. And the use of money supplied by loans is called debt funding.

Mary: So as investor, what am I?

Frank: Well, as an investor you become a partial owner of a business and

receive equity. You get shares or certificates of common stock

which represent your portion of ownership.

Mary: You did right buying the stock for me. By the way, are there any

documents which show the financial state of the company?

 



Frank: Oh yes. You've just reminded me. I’ve brought a copy of the

company's Annual Report for you to look over. You should read it

very carefully. And if you have something to ask do it, please.

Mary: Thanks a lot, Frank. I will. Does this company pay dividends on its

stock?

Frank: Yes. In fact, I studied their Annual Report and I can tell that they

have good management. Their business is doing very well, the value

of their stock has been rising. It can be an excellent long-term

investment, I am sure.

Mary: But if I want to sell my shares very soon?

Frank: No problem. Undoubtedly you can make a profit on the sale. But it

seems to me you'll want to keep this company in your portfolio.

Mary: Thank you for your advice. You are wise as usual.

Frank: Well, my advice now is to study the company's Annual Report. You

need several days for that. Then we'll meet and talk again.

 

Active Vocabulary


a stockbroker

to concern smth

loan

partial owner

Annual Report

to pay dividends

long-term investment

to make a profit on sale


биржевой маклер

зд. касаться чего-либо

заем, ссуда

совладелец

годовой отчет

платить дивиденды

долгосрочный вклад

продать с выгодой, прибылью

 

Vocabulary Exercises


Ex.1. Make up a sentence according to the model:

Model: How should the company pay the expenses? (borrow from

the government) The company should pay the expenses by

borrowing from the government.

1. How can we form an equity funding? (issue shares)

2. How can a business sell more shares of stock? (offer a dividend)

3. How should we know about the financial state of the company? (look

over the Annual Report)

4. How should he invest his savings? (buy common stock)

5. How should they make people buy their bonds? (increase the interest)


 

 



6. How can this company make a profit? (raise investment capital)

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