Exercise 1. Choose the necessary word and put it in the sentence.

1. An accounting helps... the activity |

of a business |1 to profit

2. Do you know the effect of your last.. |

on financial condition of the firm? |2 profit

3. Accounting records provide … for |

stock-holders, independent analysts. |3 efficiency

4. The second type of ratio helps the |

company its current financial position. |4 ownership

5..L is one' the two main records which |

most of the businesses prepare regularly. |5 to evaluate

6. The….of the company includes real |

estate in California |6 transaction

7. I am sure of the … of this transaction. |7 data

8. Our company's current... is very high. |8 income

9. They... from the association with that |

corporation. |9 to measure

Dialogue

(Peter and Karen work in a large company. They are having dinner in the company cafe).

Peter Hi, Karen. Glad to meet you. You looked very busy this morning. There were so many statements on your table.

Karen Oh, Peter. This is the end of the year. The accounting department is very busy;

Peter I know. We are all very busy, totaling accounts.

But I've already turned in she report on my department. Karen Good.

Peter So, how's business.

Karen I don't know everything. I am busy with some records and statements. I don't have the whole picture. But I think the company is doing very well.

Peter I am sure of it. We have to keep our creditors and investors happy.

Karen Well, the balance shed and profit and loss statement are ready. It is the end of the fiscal year. So everybody can check out the assets and liabilities, net worth and profit position of the company in the financial statements.

Peter Do you work with the pay checks.

Karen Why are you asking?

Peter I thought you could explain me the big difference between my gross pay and my net take-home pay.

Karen The explanation takes only one word-taxes. Actually the salaries are done through the computer.

Peter Really? Karen Sure. We can't handle any volume in a large company without computers.

Peter You are right. Thank you for very interesting information.

Karen Oh, its my pleasure. Let' s go to get some dessert.

Active Vocabulary

accounting department бухгалтерский отдел

to total accounts суммировать счета

to turn in the report сдать отчет

creditor кредитор

investor инвеститор

profit and loss statement отчет по прибыли и убыткам

assets and liabilities актив и пассив

net worth а) стоимость имущества за вычетом обязательств

6) собственный капитал предприятия

a financial statement финансовый отчет a

pay check платежный чек

gross валовый, брутто

gross pay плата с вычетами

net чистый, нетто

net pay плата без вычетов

tax налог

salary зарплата

fiscal year фиксальный (бюджетный) год

Vocabulary Exercises

Exercise 1. Have a look at the structure.

Can you turn in the report in time?

No, I cant turn in the report but I could when I worked in the other department.

1. Can they check the assets and liabilities?

2. Can you keep the investors and creditor;, nappy?

3. Can you explain the difference between gross pay and net take-home pay?

4. Can he compute the taxes?

5. Can we prepare profit and loss statement?

6. Can the company pay the salaries in time?

7. Can I operate the computer?

 

Exercise 2. Imagine that you work as an accountant in 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?

4. Why should you have more assets than liabilities?

5. 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?

Exercise 3. Make up the dialogue about accounting:

a) between an experienced accountant and a university graduate who has just begun to work as an accountant;

b) you are an employer and you want to hire an accountant, find out if he(she) is experienced enough in accounting.

Exercise 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

Exercise 1. Make the sentences negative.

Model: 1 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.

 

Exercise 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 Corn pi roller of I he company for two у ears.

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

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

5. Some governmental corporations issued stock certificate.

 

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 property. Sometimes it is called as equity funding. The holders of the shares form the- ownership of the company. Each snare is represented by a stock certificate, which is negotiable. It means mat one can buy and sell it. The value of a snare is determined by 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 the be paid out 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 financial 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.

Active Vocabulary

purchase - покупка, купля, приобретение

payment of expenses - оплата расходов

properly - собственность, имущество

equity funding - акционерный (долевой) способ образования

денежного фонда предприятия

debt funding образование денежного фонда предприятия

с помощью займа

holders of the shares - держатели акций

stock certificate - сертификат акций

negotiable - оборотный, могущий быть переуступленным,

купленным, проданным

net assets - стоимость имущества за

вычетом обязательств

bond - долговое обязательство, облигация

note - зд. долговая расписка

interest - доля, фиксированный процент

to pay out - выплачивать

to run a corporation - руководить корпорацией

inflow - приток ( зд. денег)

outflow - утечка ( зд. денег)

inventory - материально- производственные запасы,

инвентарь

supplies - ресурсы

debt - долг

goods - товары

Comprehension Questions

1. Why do all corporations need financing?

2. What dues 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 an important factor in determining fund raising?

 

Vocabulary Practice

Choose the necessary word and put it in the sentence.

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

borrowing. | 1equity

2. They have borrowed much money and |

they have to pay a big.... | 2 negotiable

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

4. That is a very profitable deal, for that |

purpose we need extra.... | 4 inventory

5. You can sell your shares and.... | 5 funding

They are... | 6 inflow

6. The current assets of a company |

usually include cash and... | 7 bond

7. As a result of this deal we'11 have |

greater... than outflow. | 8 debt

Dialogue

Mary It's so me, " to see you, Frank. Sorry, 1 couldn't come to your office today.

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

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 5hares 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 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 1 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 - биржевый маклер

if it concerns Seth если речь идет о чем-либо

loan - заем, ссуда

partial owner - совладелец

Annual Report - годовой отчет

to pay dividends - платить дивиденды

long-term investment - долгосрочный вклад

to make a profit on the sale - получить прибыль при продаже

Vocabulary Exercises

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