Института Экономики и управления

Методические указания

по профессионально-ориентированному чтению текстов на английском языке для подготовки бакалавров направления: 080100.62 «Экономика», профиль: «Финансы и кредит»

Института Экономики и управления

Ростов-на-Дону

УДК 803.03=03(088.8)+(09)

Методические указания по профессионально-ориентированному чтению текстов на английском языке для подготовки бакалавров направления: 080100.62 «Экономика», профиль: «Финансы и кредит».- Ростов н/Д: Рост.гос.строит.ун-т, 2013.-36 с.

Предназначено для бакалавров, изучающих дисциплину «Иностранный язык» для овладения навыков профессионально-ориентированного чтения, понимания и различия реалий иноязычной речи.

Электронная версия находится в библиотеке, ауд.224

УДК 803.03=03(088.8)+(09)

Составитель: преп. Н.С. Журавлёва

Рецензент: д.фил.н., проф. О.П. Рябко

Редактор Н.Е. Гладких

Темплан 2013 г., поз.

________________________________________________________________________________

Подписано в печать. Формат 60х84 / 16. Бумага писчая. Ризограф

Уч.-изд. л. 1, 3

Тираж 50 экз. Заказ

________________________________________________________________________________

Редакционно-издательский центр

Ростовского государственного строительного университета

344022, г. Ростов-на-Дону, ул. Социалистическая, 162

строительный университет, 2013

Contents

1. Business Finance………………………………………………………… 4

2. Personal Banking ……………………………………………………...... 7

3. Commercial and Retail Banking ……………………………………….. 11

4. Central Banking ………………………………………………………… 14

5. Venture Capital …………………………………………………………. 18

6. Stocks and Shares ……………………………………………………….. 22

7. Financial Planning ………………………………………………………. 27

8. Business Plans …………………………………………………………… 31

Литература ………………………………………………………………... 36

Business Finance

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?

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.

B. Banking products and services

Commercial banks offer loans – fixed sums of money that are lent for a fixed period (e.g. two years). They also offer overdrafts, which allow customers to overdraw an account- they can have a debt, up to an agreed limit, on which interest is calculated daily. This is cheaper than a loan if, for example, you only need to overdraw for a short period. Banks also offer mortgages to people who want to buy a place to live. These are long-term loans on which the property acts as collateral or a guarantee for the bank. If the borrower doesn’t repay the mortgage, the bank can repossess the house or flat – the bank takes it back from the buyer, and sells it.

Banks exchange foreign currency for people going abroad, and sell traveler’s cheques which are protected against loss or theft. They also offer advice about investments and private pension plans – saving money for when you retire from work. Increasingly, banks also try to sell insurance products to their customers.

B. E-banking

In the 1990s, many commercial banks thought the future would be in telephone banking and internet banking or e-banking. But they discovered that most of their customers preferred to go to branches - local offices of the bank – especially ones that had longer opening hours, and which were conveniently situated in shopping centres.

Complete the advertisement with the words from the box.

credit card current accounts debit card direct debit statements foreign currency standing order savings accounts traveler’s cheques

ABC Bank now offers 1% interest on (1) ……… and 2.5% on (2) …………… We will give you a chequebook and plastic: a free (3) …………. To use in cash dispensers, and the possibility to apply for a (4) …………. You can pay fixed monthly bills by (5) ……….., and other bills by (6) ………... There are no account charges as long as you remain in credit, and we sent you a free monthly (7) ………… We can also sell you (8) …….. for your next holiday, or (9) …………. For greater security. What are you waiting for? Call us today.

Discuss the following.

· Do you prefer to go to the local branch of your bank, or to use the internet or the telephone?

· Why do you think most customers prefer to go to the bank?

B. Credit

Banks also create credit - make money available for someone to borrow - because the

money they lend, from their deposits, is usually spent and so transferred to another bank account.

The capital a bank has and the loans it has made are its assets. The customers' deposits are liabilities because the money is owed to someone else. Banks have to keep a certain percentage of their assets as reserves for borrowers who want to withdraw their money. This is known as the reserve requirement. For example, if the reserve requirement is 10%, a bank that receives a? 100 deposit can lend? 90 of it. If the borrower spends the money and writes a cheque to someone who deposits the? 90, the bank receiving that deposit can lend? 8 I. As the process continues, the banking system can expand the first deposit of? 100 into nearly? 1, 000. In this way, it creates credit of almost? 900.

C. Loans and risks

Before lending money, a bank has to assess or calculate the risk involved. Generally, the greater the risk for the bank of not being repaid, the higher the interest rate they charge. Most retail banks have standardized products for personal customers, such as personal loans. This means that all customers who have been granted a loan have the same terms and conditions — they have the same rules for paying back the money.

Banks have more complicated risk assessment methods for corporate customers — business clients - but large companies these days prefer to raise their own finance rather than borrow from banks.

Banks have to find a balance between liquidity — having cash available when depositors want it - and different maturities — dates when loans will be repaid. They also have to balance yield - how much money a loan pays - and risk.

Discuss the following.

· Look at some commercial bank websites from your country. Which banks offer the best rates for borrowers and lenders?

Central Banking

Discuss the following.

· Is the central bank in Russia independent from the government?

· What powers and responsibilities does it have?

Venture Capital

A. Raising capital

Alex Rodriguez works for a venture capital company:

‘As you know, new businesses, called start-ups, are all private companies that aren’t allowed to sell stocks or shares to the general public. They have to find other ways of raising capital. Some very small companies are able to operate on money their founders - the people who start the company — have previously saved, but larger companies need to get capital from somewhere else. As everybody knows, banks are usually risk-averse. This means they are unwilling to lend to new companies where there’s a danger that they won’t get their money back. But there are firms like ours that specialize in finding venture capital: funds for new enterprises.

Some venture capital or risk capital companies use their own funds to lend money to companies, but most of them raise capital from other financial institutions. Some rich people, who banks call high net worth individuals, and who we call angels or

angel investors, also invest in start-ups. Although new companies present a high level of risk, they also have the potential for rapid growth - and consequently high profits - if the new business is successful. Because of this profit potential, institutions like pension funds and insurance companies are increasingly investing in new companies particularly hi-tech ones.^’

B. Return on capital

‘Venture capitalists like ourselves expect entrepreneurs - people with an idea to start a new company - to provide us with a business plan. Because of the high level of risk involved, investors in start-ups usually expect a higher than average rate of return - the amount of money the investment pays - on their capital. If they can’t get a quick return in cash, they can buy the new company’s shares. If the company is successful and later becomes a public company, which means it is listed on a stock exchange, the venture capitalists will be able to sell their shares then, at a profit. This will be their exit strategy.

Venture capitalists generally invest in the early stages of a new company. Some companies need further capital to expand before they join a stock exchange. This is often called mezzanine financing, and usually consists of convertible bonds - bonds that can later be converted to shares - or preference shares that receive a fixed dividend. Investors providing money at this stage have a lower risk of loss than earlier investors like us, but also less chance of making a big profit.’

Discuss the following.

· Would you invest in start-ups? In what fields?

· If you wanted to start a business, how would you try to raise capital?

Stocks and shares

C. Going public

A successful existing company wants to expand, and decides to go public. The company gets advice from an investment bank about how many shares to offer and at what price. So the company gets independent accountants to produce a due diligence report. Then the company produces a prospectus which explains its financial position, and gives details about the senior managers and the financial results from previous years. The company makes a flotation or IPO (initial public offering). An investment bank underwrites the stock issue.

Discuss the following.

· Have there been any big flotations in the news recently?

· Are there any public companies whose stocks you would like to buy?

Financial Planning

A. Financial Planning

Alia Rahal works in the financial planning department of a large manufacturing company:

‘ Financial planning involves calculating whether new projects would be profitable. We have to calculate the probable rate of return: the amount of income we’d receive each year from the investment, expressed as a percentage of the total amount invested. If we're going to finance a project with our own money, the rate of return must be at least as high as we could get by depositing the money in a bank instead, or by making another risk-free investment, like buying government bonds.

If we need to borrow money to finance a new investment, its projected rate of return has to be higher than the cost of capital - the amount we have to pay to borrow the money.’

B. Discounted cash flows

‘We usually calculate the discounted cash flow value of an investment. This means discounting or reducing future cash flows to get their present values - in other words, calculating the present value of money to be received in the future. This is because the value of money decreases over time. Firstly, there’s nearly always inflation, so cash will have lower purchasing power in the future: you'll be able to buy less with the same amount of money. And secondly, if you had the money now, you could get income by using or investing it. The return we could get by investing the money in other ways is the opportunity cost of capital. So waiting for money is also a cost. This is the time value of money: how much more it is worth to receive money now rather than in the future.’

C. Comparing investment returns

'If we have to choose among possible investments in new projects, we work out the net present value (NPV) of each project by adding up all the expected cash flows, discounted to their present value, minus the initial investment. To do this, we have to select a discount rate or capitalization rate. This is usually the interest rate we pay for borrowing the capital, but we could increase it if there's a lot of uncertainty or risk.

Discounting sounds complicated, but it isn't. It’s the opposite of compounding interest. For example, if you invest $1, 000 at 10% for five years, it will yield 1.61 times its original value. So you get back $1, 610, including $610 compound interest. A discount rate of 10% has a discount factor of one divided by 1.61, which is 0.62. So $620 invested now will be worth $ 1, 000 in five years if it’s invested at 10%.

When we’re comparing alternative investments, we also calculate the internal rate of return (IRR). That’s the interest rate or discount rate that gives a net present value of zero in today’s money values. In other words, the present value of the cash that we’re going to receive from an investment is the same as the present value of borrowing that cash. We normally choose the investment with the highest IRR.’

Discuss the following.

· What return can a company get on risk-free investment today?

· What is the minimum rate of return a company would require on an uncertain new investment?

Business Plans

Discuss the following.

· Describe what each chapter of a business plan includes.

· If you were starting up a new company, what product or service would it offer? What would you include in your business plan to try to convince venture capitalists to invest?

Литература

1. Любимцева С.Н., Коренева В.Н. Курс английского языка для финансистов. М.: ГИС, 2009

2. Cristine Johnson. Intelligent Business. Pre-intermediate. Pearson Education Limited, 2010

3. Ian Mckenzie. Professional English: Finance. Cambridge University Press, 2009

Методические указания

Института Экономики и управления

Ростов-на-Дону

УДК 803.03=03(088.8)+(09)

Электронная версия находится в библиотеке, ауд.224

УДК 803.03=03(088.8)+(09)

Составитель: преп. Н.С. Журавлёва

Рецензент: д.фил.н., проф. О.П. Рябко

Редактор Н.Е. Гладких

Темплан 2013 г., поз.

________________________________________________________________________________

Подписано в печать. Формат 60х84 / 16. Бумага писчая. Ризограф

Уч.-изд. л. 1, 3

Тираж 50 экз. Заказ

________________________________________________________________________________

Редакционно-издательский центр

Ростовского государственного строительного университета

344022, г. Ростов-на-Дону, ул. Социалистическая, 162

строительный университет, 2013

Contents

1. Business Finance………………………………………………………… 4

2. Personal Banking ……………………………………………………...... 7

3. Commercial and Retail Banking ……………………………………….. 11

4. Central Banking ………………………………………………………… 14

5. Venture Capital …………………………………………………………. 18

6. Stocks and Shares ……………………………………………………….. 22

7. Financial Planning ………………………………………………………. 27

8. Business Plans …………………………………………………………… 31

Литература ………………………………………………………………... 36

Business Finance

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