Read the text about business finance and answer the following questions.

· What are the main capital sources?

· What is the difference between revenue and profit?

A. Capital

When people want to set up a company, they need money, called capital.

Companies can borrow this money, called a loan, from banks. The loan must be paid back with interest: the amount paid to borrow the money. Capital can also come from issuing shares or equities – certificates representing units of ownership of a company. The people who invest money in shares are called shareholders and they own part of the company. The money they provide is known as share capital. Individuals and financial institutions, called investors, can also lend money to companies by buying bonds – loans that pay interest and are repaid at a fixed future date.

Money that is owed – that will have to be paid – to other people or businesses is a debt. In accounting, companies’ debts are usually called liabilities. Long-term liabilities include bonds; short-term liabilities include debts to suppliers who provide goods or services on credit – that will be paid for later.

The money that a business uses for everyday expenses or has available for spending is called working capital or funds.

B. Revenue

All the money coming into a company during a given period is revenue. Revenue minus the cost of sales and operating expenses, such as rent and salaries, is known as profit, earnings or net income. The part of its profit that a company pays to its shareholders is a dividend. Companies pay a proportion of their profits to the government as tax, to finance government spending. They also retain, or keep, some of their earnings for future use.

C. Financial Statements

Companies give information about their financial situation in financial statements. The balance sheet shows the company’s assets – the things it owns; liabilities – the money it owes; and its capital. The profit and loss account shows the company’s revenues and expenses during a particular period, such as three months or a year.

Read the text again and match the English collocations on the left to their Russian equivalents on the right.

1) to set up a business	a) быть должным деньги
2) to borrow a loan from a bank	b) предоставлять товары в кредит
3) to lend money	c) вкладывать деньги
4) to invest money	d) выпускать акции
5) to owe money	e) долгосрочные обязательства
6) to issue shares	f) текущие расходы
7) long-term liabilities	g) оборотный капитал
8) to provide goods on credit	h) удерживать прибыль
9) to buy bonds	i) финансовый отчёт
10) working capital	j) активы компании
11) operating expenses	k) открывать компанию
12) to retain earnings	l) брать кредит в банке
13) company’s assets	m) предоставлять деньги в кредит
14) financial statement	n) счёт прибылей и убытков
15) profit and loss account	o) балансовый отчет
16) balance sheet	p) покупать облигации

Read the text again and answer the following questions.

1. What do you need to set up a business?

2. What is interest?

3. Who are shareholders? What do they get when a company has a profit?

4. What do investors do?

5. How are debts called in accounting?

6. What is working capital?

7. How is profit calculated?

8. What is tax? What is its purpose?

9. What financial statements do you know?

Complete the crossword puzzle using the information from the text.

Across

3. Small companies often try to get bank loans when they need to ……. money.

5. We don’t have sufficient ….. to build a completely new factory.

7 and 6 down. Details of company’s liabilities are shown on the ……. …….

8. We’re going to raise more money by selling new shares to our existing …….

12. We had to raise $50, 000 …… in order to start the business.

13. We’re going to pay back some of the people who lent us money, and reduce our ……..

14. I decided to buy a $10, 000 ……. instead of shares, as it’s probably safer.

16. Another term for profit is net ……..

18. I think this is a good investment: it pays 8% …...

20. When they saw our financial statements, the bank refused to …… us any more money.

21. Profit is the difference between revenue and …….

Down

1. The profit and ……. account shows if a company is receiving more money than it’s spending.

2. If you don’t like taking risks, you should only …… in very successful companies.

4. A company’s retained earnings belong to its ……..

6. See 7 across.

9. Anything a company uses to produce goods or services is an ……...

10. The company made such a big profit, I expected a higher ……..

11. We sold a lot more last year, so our ……. went up.

15.We ……. our suppliers $100, 000 for goods bought on credit.

17. Everyone who buys a share …… part of the company.

19.Thirty per cent of our profits goes straight to the government in …….

Make up your own sentences using the vocabulary from ex.1 and the text.

Discuss the following.

· Think of a company you are interested in. How was it financed when it was set up, and how is it financed now?

Personal Banking

Read the text about personal banking and answer the following questions.

· What is the difference between a current account and a savings account?

· What are the ways people use to pay bills?

· What do banks offer?

A. Current accounts

A current account is an account which allows customers to take out or withdraw money, with no restrictions. Money in the account does not usually earn a high rate of interest: the bank does not pay much for ‘borrowing’ your money. However, many people also have a savings account or deposit account which pays more interest but has restrictions on when you can withdraw your money. Banks usually send monthly statements listing recent sums of money going out, called debits, and sums of money coming in, called credits.

Nearly all customers have a debit card allowing them to make withdrawals and do other transactions at cash dispensers. Most customers have a credit card which can be used for buying goods and services as well as for borrowing money. In some countries, people pay bills with cheques. In other countries, banks don’t issue chequebooks and people pay bills by bank transfer. These include standing orders, which are used to pay regular fixed sums of money, and direct debits, which are used when the amount and payment date varies.

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