Choose the necessary word and put it in the sentence an accounting helps

UNIT 6. ACCOUNTING

Accounting shows a financial picture of the firm. An accounting department records and measures the activity of a business. It reports on the effects of the transactions on the firms financial condition. Accounting records give a very important data. It is used by management, stockholders, creditors, independent analysts, banks and government.

Most businesses prepare regularly the two types of records. That is the income statement and balance sheet. These statements show how money was received and spent by the company.

One major tool for the analysis of accounting records is ratio analysis. A ratio analysis is the relationship of two figures. In finance we operate with three main categories of ratios. One ratio deals with profitability, for example, the Return on Investment Ratio. It is used as a measure of a firms operating efficiency.

The second set of ratios deals with assets and liabilities. It helps a company to evaluate its current financial position. The third set of ratios deals with the overall financial structure of the company. It analyses the value of the ownership of the firm.

Active Vocabulary

Accounting — бухгалтерский учет

Record — документ, запись, протокол

to record — записывать, регистрировать

to measure — измерять

transaction — сделка, банковская операция

firm’s financial condition — финансовое положение фирмы

to provide data — обеспечивать данными

creditor — кредитор

independent — независимый

income statement — отчет о доходах

balance sheet — балансовый отчет

to receive — получать

to spend — тратить

ratio analysis — анализ коэффициентов

profitability — прибыльность

Return on Investment Ratio — коэффициент возвращения инвестиции

efficiency — эффективность, производительность

to evaluate — оценивать

value — ценность, стоимость

ownership — собственность

overall financial structure — полная финансовая структура

Comprehension Questions

1. What is the purpose of accounting?

2. Who uses the data provided by accounting firms?

3. What are the two types of records which most businesses prepare?

4. What can you know analyzing the income statement and balance sheet of a company?

5. What is the purpose of the ratio analysis?

6. What categories of ratios in finance do you know?

Vocabulary Practice

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

1. An accounting helps… the activity of a business.

2. Do you know the effect of your last…on financial condition of the firm?

3. Accounting records provide … for stock-holders, independent analysis

4. The second type of ratio helps the company … its current financial position.

5. … is one the two main records which most of the businesses prepare regularly.

6. The … of the company includes real estate in California.

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

8. Our company’s current… is very high

9. They … from the association with that corporation.

1 to profit

2 profit

3 efficiency

4 ownership

5 to evaluate

6 transaction

7 data

8 income statement
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 the 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. 1 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 sheet 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

б) 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 — фискальный (бюджетный) год

Exercise. 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?

Self-control

Read the text

Work of no company is possible without measuring and recording the financial data concerning its activity. This process is called accounting and the main document of it is called a balance sheet of company.

The balance sheet consists of two parts: assets and liabilities, which should be equal in the sum, thus balancing each other.

Besides this balance, which is one of the main organization principles of any company, accounting serves many other purposes, for example, the company’s communications with the organizations outside of, e.g. banks or tax inspections.

More or less brief summaries of the company’s performance balance sheet are called in Britain “accounts” and in America “financial statements”. This information is carefully studied by a bank crediting a company.

Exercise 1. Write down 5 questions about the text.

Read and discuss the text

THE BALANCE SHEET

Financial statements are the final product of the accounting process. They provide information on the financial condition of a company. The balance sheet, one type of financial statement, provides a summary of what a company owns and what it owes on one particular day.

Assets represent everything of value that is owned by a business, such as property, equipment, and accounts receivable. On the other hand, liabilities are the debts owed by a company — for example, to suppliers and banks. If liabilities are subtracted from assets (assets — liabilities), the amount remaining is the owners’ share of a business. This is known as owners’ or stockholders’ equity.

One key to understanding the accounting transactions of a business is to understand the relationship of its assets, liabilities, and owners’ equity. This is often represented by the fundamental accounting equation: assets equal liabilities plus owners’ equity.

ASSETS = LIABILITIES + OWNERS’ EQUITY

These three factors are expressed in monetary terms and therefore are limited to items that can be given a monetary value. The accounting equation always remains in balance; in other words, one side must equal the other.

The balance sheet expands the accounting equation by providing more information about the assets, liabilities, and owners’ equity of a company at a specific time (for example, on December 31, 1996). It is made up of two parts. The first part lists the company assets, and the second part details liabilities and owners’ equity. Assets are divided into current and fixed assets. Cash, accounts receivable, and inventories are all current assets. Property, buildings, and equipment make up the fixed assets of a company. The liabilities section of the balance sheet is often divided into current liabilities (such as accounts payable and income taxes payable) and long-term liabilities (such as bonds and long-term notes).

The balance sheet provides a financial picture of a company on a particular date, and for this reason it is useful in two important areas. Internally, the balance sheet provides managers with financial information for company decision-making. Externally, it gives potential investors data for evaluation of the company’s financial position

UNIT 7. CORPORATE FINANCE

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 as 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 by the net assets divided by the total number of shares outstanding. The value of the share also depends on fee 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 t 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 fee sale of goods and services. In the long ran the inflow must fee 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

paуment 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 does equitу 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. 1 equity.

2. They have borrowed much money and they 2 negotiable.

have to pay a big…. 3 interest.

3. Financing by shares is called… funding. 4 inventory.

4. That is a very profitable deal, for that 5 funding.

purpose we need extra …. 6 inflow.

5. You can sell your shares and …. They are… 7 bond

6. The current assets of a company usually 8 debt.

include cash and….

7. As a result of this deal we’ll have greater…

than outflow.

Dialogue

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. 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 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 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 — биржевый маклер

if it concerns smth — 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

Exercise . Answer the questions.

1. What kind of funding is preferable; equity or debt?

2. What shares of what enterprises of your town would you buy? Explain why.

3. Imagine that your business is going to get capital funds by borrowing. What bond interest would you charge? Explain why.

4. What should you do to produce more inflow of capital?

5. How can you calculate the net assets of your enterprise?

Exercise . Translate from Russian into English.

1. Наше предприятие нуждается в денежных фондах для покупки оборудования.

2. Я предпочитаю акционерный способ образования денежного фонда предприятия. Он привлекает большее количество капитала.

3. Акция облигации могут быть переуступлены, куплены, проданы.

4. Я хочу купить десяти процентные облигации.

5. Мы намерены выплатить все долги к началу финансового года.

6. Ты получишь хорошую прибыль при продаже этих товаров.

7. Он является совладельцем компании SONY.

8. Покупка акций этой компании — хороший долгосрочный вклад.

9. Если речь идет о моих деньгах, я изучу годовой отчет компании.

Self-control

ACQUISITION OF CAPITAL

A corporation needs capital in order to start up, operate, and expand its business. The process of acquiring this capital is known as financing. A corporation uses two basic types of financing: equity financing and debt financing. Equity financing refers to funds that are invested by owners of the corporation. Debt financing, on the other hand, refers to funds that are borrowed from sources outside the corporation.

Equity financing (obtaining owner funds) can be exemplified by the sale of corporate stock. In this type of transaction, the corporation sells units of ownership known as shares of stock. Each share entitles the purchaser to a certain amount of ownership. For example, if someone buys 100 shares of stock from Ford Motor Company, that person has purchased 100 shares worth of Ford’s resources, materials, plants, production, and profits. The person who purchases shares of stock is known as a stockholder or shareholder.

All corporations, regardless of their size, receive their starting capital from issuing and selling shares of stock. The initial sales involve some risk on the part of the buyers because the corporation has no record of performance. If the corporation is successful, the stockholder may profit through increased valuation of the shares of stock, as well as by receiving dividends. Dividends are proportional amounts of profit usually paid quarterly to stockholders. However, if the corporation is not successful, the stockholder may take a severe loss on the initial stock investment.

Often equity financing does not provide the corporation with enough capital and it must turn to debt financing, or borrowing funds. One example of debt financing is the sale of corporate bonds. In this type of agreement, the corporation borrows money from an investor in return for a bond. The bond has a -maturity date, a deadline when the corporation must repay all of the money it has borrowed. The corporation must also make periodic interest payments to the bondholder during the time the money is borrowed. If these obligations are not met, the corporation can be forced to sell its assets in order to make payments to the bondholders.

All businesses need financial support. Equity financing (as in the sale of stock) and

debt financing (as in the sale of bonds) provide important means by which a corporation may obtain its capital.

Exercise 1

Look at the terms in the left-hand column and find the correct synonyms or definitions in the right-hand column. Copy the corresponding letters in the blanks:

1.interest payment 1) satisfy

2. severe 2) give one a right

3.obligation 3) occurring at regular times

4.source 4) extreme

5.entitle 5) first

6.periodic 6) the contract or promise that

compels one to follow a

certain course of action

7.issue 7) a sum paid for borrowing

money

8.deadline anything or place from

which something is obtained

9.meet 9) a time limit for finishing

something

10.initial 10) print for sale or distribution

Exercise 2

Determine which of the following statements are true and which are false. Then put T or F in the blanks. Correct those statements which are false by rewriting them:

1) Long-term financing is used by a company to

purchase new equipment and to construct additional facilities.

2) A new business only needs capital to meet day-

to-day expenses.

3) In financing business operation, a company

relies almost entirely on short-term financing.

4) Long-term and short-term financing may be

acquired from outside sources.

5) How well a company manages its finances affects

the overall success of the business venture.

Exercise 3

Circle the letters of the answers that best complete the sentences below:

1. The process of acquiring capital is known as:

1. finance
2. financier
3. financing
4. financial

1. The unit of ownership in a corporation is a:

1. bond
2. share
3. certificate
4. stock

1. All corporations receive their starting capital by:

1. selling bonds
2. purchasing stock
3. purchasing shares
4. selling stock

1. The sale of corporate bonds is an example of:

1. debt financing
2. bond financing
3. equity financing
4. corporate financing

1. A corporation may be forced to sell its assets if it does not:

1. pay dividends
2. share its profits with stockholders
3. make the required payments to bondholders

sell bonds

UNIT 8. BАNKS AND BUSINESS

Banks are different in different countries. Let’s speak about the banks in the United States of America. There, commercial banks are classified into two main groups. First, there are national banks. They are charted and supervised by the Federal Government. Secondly, there are stale banks. They are charted and supervised by the state in which they are operated. All commercial banks can make loans to borrowers.

Major commercial banks in such cities as Tokyo, Paris, Rio cooperate with each other. In this way they finance imports and exports between countries.

An importer buys merchandise from another country using the currency of that country, for that purpose he buys this currency from the foreign exchange department of his bank. And in the same way if an exporter receives foreign money from sales to other countries, he sells this currency to his bank. By this method the currency of any country can usually be exchanged.

Active Vocabulary

commercial bank — коммерческий банк

national bank — национальный банк

to charter — учреждать, создавать

to supervise — заведовать, контролировать

state bank — государственный банк

merchandise — товары

currency — валюта, деньги

foreign exchange department — отдел обмена валюты

to exchange currency — обменивать валюту

Comprehension Questions

1. What do all commercial banks do?

2. What kinds of commercial banks in the USA do you know? What are they called?

3. Who supervises the operations of national bank?

4. What kind of currency does an importer generally use when he buys goods from another country?

5. What do you know about the «international exchange»?

6. What is the currency of this country called?

7. What is the exchange rate between your currency and the currency of the USA and Germany? How can you find it out if you don’t know it?

Vocabulary Practice

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

Dialogue

(A banker’s office in New York City. Mr. Smith, a Vice President, is speaking to Bill Wilson).

Smith O.K. Bill. As a secretary you ought to know certain things about banking.

Bill That’s what I want. I hope to make my career in banking.

Smith And what bank services are you familiar with?

Bill Oh, let me see. 1 am familiar with checking and savings accounts, safety deposit boxes, insurance and things like that.

Smith It is something.

Bill But I don’t have a clear idea of the services which banks offer to business.

Smith O.K. Let’s discuss it then, in fact it is more directly concerned with what passes over my desk.

Bill I think businesses come to the banks for loans.

Smith You are right. Banks make loans to corporations, to organizations, individuals and to small companies. For this service, we always charge interest.

Bill But how can a bank decide whether a business should receive a loan.

Smith First of all we request a financial statement. It shows what the company has in inventory, accounts receivable and other assets and liabilities. Profit and loss statement shows the company’s income and expenses.

Bill In other words you look over the financial situation of a business.

Smith Exactly. If the company is eligible for a loan, it may choose a long-term loan or a short-term loan.

Bill I see. And how much interest does the bank charge on these loans?

Smith It can be different. We have so-called prime-rate, that is the lowest interest rate available at the particular time. Only prefered customers can have it.

Bill Who decides on prime rate then?

Smith Major lending banks do.

Bill Oh, I must know that. And very often I hear the

term «a line of credit». I have a vague idea what it is.

Smith A line of credit is the maximum amount of money that a company can borrow from a bank. This top amount of customer’s credit is based on the profits and earnings of a business.

Bill Well. Then it is very important to have a good line of credit, isn’t it?

Smith Sure. A bank also issues letters of credit. Such letter says that its holder can borrow up a certain sum of money. Or a bank can also issue a letter of credit for a person who goes to the other country where another bank is involved. Then there is the credit, reference letter which recommends a company to its suppliers, and well — I could goon all morning.

Bill Thank vou. It’s very useful information.

Smith O.K. We cars pass on to a more complicated subject. That is lax service.

Active Vocabulary

banking — банковское дело

to make a career in smth — сделать карьеру в чем-либо

bank services — банковские услуги

checking account — чековый счет

savings account — сберегательный счет с установленным процентом

safety deposit box — сейф для депозитов, предоставляемый частным лицам в банке

to make a loan to smb. — давать заем кому-либо

to be eligible far a loan — подходящий для займа (т.е. признаваемый платежеспособным)

long-term loan — долгосрочный заем

shot-term loan — краткосрочный заем

prime-rate — наименьший процент со ссуды, установленный в определенное время и в

определенном месте

preferred customer — привилегированный клиент

to be available — наличный, имеющийся в распоряжении

line of credit — кредитный лимит

to borrow — занимать

letter of credit — кредитное письмо, аккредитив

credit reference letter — рекомендательное кредитное письмо

insurance – страхование.

Exercise. Translate into English.

1. Государство учреждает коммерческие банки.

2. Если ты хочешь купить товары за границей, ты должен поменять деньги в отделе обмена валюты.

3. Я бы хотел сделать карьеру в банковском деле.

4. Все банки устанавливают проценты на ссуду.

5. Наш банк намерен предоставить краткосрочную ссуду этому предприятию.

6. Наименьший процент со ссуды предоставляется привилегированным клиентам.

7. Банки могут выпускать аккредитивы и рекомендательные кредитные письма.

8. Я намерен занять крупную сумму денег.

9. Банк считает, что это предприятие платежеспособно и ему можно предоставить заем.

Self-control

Aclive Vocabulary

Account — счет

Accountant — бухгалтер

board of directors — совет директоров

capital — капитал

clerk — служащий

current account – текущий счет

deposit account – депозитнфй счет

depositor — вкладчик

dividend — дивиденд

draw upon an account (v) — снимать со счета

invest (v) — инвестировать

interest — процент,поцентный доход

joint stock — акционерный капитал

loan – ссуда,заём,кредит

profit — прибыль

reserve-резерв,запас

run the bank (v) – управлять банком

shares — акции

shareholder — акционер

statement — выписка из банковского счета

standing order — постоянное поручение клиента банку

Dialogue

’«Read the dialogue in parts.

Student: Who really owns the bank ?

Banker: The stockholders own it. In the beginning, they put up the necessary capital and were granted a charter from the government.

S.: Are the members of the board of directors stockholders?

B.: Oh, yes. They’re chosen by the other stockholders to operate the bank.

S.: And the board hires the president and the vice-presidents to manage it?

B.: That’s right. Along with the cashier, the tellers and the clerical workers.

S.: I guess most of your work Ьал to do with checking and savings accounts and making loans.

B.: Yes. But we invest money too. Planning the bank’s investments is also very important.

S.: Do you divide all the profits among the stockholders?

B.: Not all of them. The stockholders receive regular dividends.

But some of our earnings are held in reserve accounts.

S.: I suppose that would be necessary.

B.: Here’s a copy of our last published statement. You see, the reserves are shown here аз surplus and undivided profits.

Questions on the dialogue:

1. Who owns the bank?
2. How does a bank start?
3. Who chooses the board?
4. What’s the board’s task?

*

1. Who hires the employees?
2. What are the bank’s main activities?
3. How are the profits distributed?
4. How are the stockholders kept informed?

As you read the passage, find the answers to the questions given below.

The English commercial banks have branches in all the major towns and a similar structure and mode of working is common to them all The owners are the shareholders. At the outset they provide the necessary capital. They are all organized on the joint stock principle and are registered public companies.

The Chairman and Board of Directors are elected by the ordinal shareholders at the Annual General Meeting and are responsible for the efficient management of the bank. The Board is concerned with the over-all policy of the bank and the major decisions which put that policy into effect.

The Board will appoint a Managing Director who is directly responsible to them and a member of the Board. They will also appoint the most senior executives who in turn appoint the rest of the clerical staff who will be responsible in different capacities for the day to day running of the bank.

The essence of a bank’s activities is the collection of deposits through current accounts and deposit accounts and the use of these funds to provide loans or funds for investment .The current account is the one commonly held and is drawn upon by cheques and standing orders_. The deposit account is more in the nature of a savings account The pattern of investments which a bank decides upon is crucial because, on the one hand, the bank must use the funds wisely to make a profit and, on the other, funds must be available for depositors to withdraw when they wish to do so.

At the end of each business year the Directors recommend and the .Annual General Meeting decides how much of the profit should be distributed to the shareholders as dividend, and how much should be retained in the business. In preparation for the Annual General Meeting, a bank publishes its Report and Accounts. These must be sent to every shareholder and are also available for anyone with an interest in the

affairs of the bank. From the published accounts shareholders can easily determine the total profits the bank has earned and how much is available for distribution.

Questions on the text:

1. Who owns the English commercial bank?
2. How does a bank start?
3. Who chooses the Board?
4. What is the Board’s task?
5. Who hires the employees?
6. What are the bank’s main activities?
7. How are the profits distributed?
8. How are the shareholders kept informed?

Borrowing money

When people set up a new business they need help in financing it. In this case they must know how much money they need to borrow and how many workers they need to employ. To do it they usually draw a cash flow chart:

What is cash flow ?

Money can do two things: it comes in and goes out. This is called cash flow. When it comes in faster than it goes out the business is effective and vice versa Borrowing money from the bank. The bank managers will lend you money only when they think your business is a good investment . Banks lending money may ask you to provide a security. Security is property that guarantees your ability to pay off your debts if your business goes bust. Sometimes it is enough to provide a guarantor (your friend or relative who can repay your loan for you).

There are different forms of borrowing money. The main two are overdraft and loan.

Overdraft . You can take out more money than you have in your account. The bank sets up the limit. You pay interest on all the sum you borrow on a daily basis. The bank can ask you to repay your overdraft at any moment. Loan. This is safer than an overdraft because the period of your repay is fixed . Put you pay interest on the whole loan) (though you may need less).

Литература

О.И. Антонов Английский язык для бизнесменов .- Москва Издательско-информационная фирма «ИНФОРМПЕЧАТЬ», 2009

А.Г. Саженкова Тексты и упражнения по менеджменту и экономике.- Москва, 2006

В.В. Кулешов, В.М. Тимонова, Introduction to business English., Москва 2004

Елихина Ольга Викторовна, Мирошник Елена Вячеславовна

English for part—time students

Учебное пособие по чтению для студентов заочного отделения

080502, 080507 — 1 часть

Рецензент: секция иностранных языков (О.Д. Филиппова)

Редактор Г.В. Атмашкина

Компьютерная верстка О.В. Елихина, Е.В. Мирошник

Электростальский политехнический институт филиал федерального государственного бюджетного образовательного учреждения высшего профессионального образования «Московский государственный машиностроительный университет (МАМИ)»

144000, Московская обл., г. Электросталь,

ул. Первомайская, д.7.

Тел. (496) 57-4-30-24

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приобретение

payment of expenses— оплата расходов

property— 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 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 an important factor in determining fund raising?
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Vocabulary Practice
Choose the necessary word and put it in the sentence.

1. … funding is a financing formed by I

borrowing. I 1 equity

1. They have borrowed much money and I

they have to pay a big … . I 2 negotiable

1. Financing by shares is called … funding. I 3 interest
2. That is a very profitable deal, for that I

purpose we need extra … . I 4 inventory

1. You can sell your shares and … . I 5 funding

They are … I 6 inflow

1. The current assets of a company I

usually include cash and … . I 7 bond

1. As a result of this deal we’ll have I

greater … than outflow. I 8 debt
Dialogue
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. 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 shares or

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lessons

BANKS AND BUSINESS
Text
Banks are different in different countries. Let’ s speak about the banks in the United States of America. There, commercial banks are classified into two main groups. First, there are national banks. They are charted and supervised by the Federal Government. Secondly, there are state banks. They are charted and supervised by the state in which they are operating All commercial banks can make loans to borrowers.

Major commercial banks in such cities as Tokyo, Paris, Rio cooperate with each other. In this way they finance imports and exports between countries.

An importer buys merchandise from another country using the currency of that country. For that purpose he buys this currency from the foreign exchange department of his bank. And in the same way if an exporter receives foreign money from sales to other countries, he sells this currency to his bank. By this method the currency of any country can usually be exchanged.

Active Vocabulary

commercial bank- коммерческий банк,

national bank— национальный банк

to charter— учреждать, создавать

to supervise- заведовать, контролировать

state bank- государственный банк

merchandise- товары

currency- валюта, деньги

foreign exchange department- отдел обмена валюты

to exchange currency- обменивать валюту

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Comprehension Questions

1. What do all commercial banks do?

2. What kinds of commercial banks in the USA do you know? What are they called?

3. Who supervises the operations of national bank?

4. What kind of currency does an importer generally use en he buys goods from another country?

5. What do you know about the «international exchange»?

6. What is the currency of this country called?

7. What is the exchange rate between your currency and the icy of the USA and Germany? How can you find it out if don’t know it?
Vocabulary Practice

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

1. Federal government….. and….. all I 1 merchandise national banks. I 2 currency

2. International cooperation between I banks makes it possible….. imports and I exports. I 3 commercial

3. It is possible to convert American I dollars to Swiss francs in….. department. I 4 foreign exchange

4. The….. of Germany is the mark. I 5 to finance

5. All….. banks make loans to borrowers. I 6 to supervise 6. If the importer buys….. from another I country he will pay for it in the currency I of this country. I 7 to charter

Dialogue

(A banker’s office in New York City. Mr. Smith, a Vice President, is speaking to Bill Wilson).

Smith O.K. Bill. As a secretary you ought to know certain things about banking

Bill That’s what I want. I hope to make my career in banking.

Smith And what bank services are you familiar with?

Bill Oh, let me see. I am familiar with checking and savings accounts, safety deposit boxes, insurance

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and things like that.

Smith It is something.

Bill But I don’t have a clear idea of the services which banks offer to business.

Smith O.K. Let’s discuss it then. In fact it is more directly concerned with what passes over my desk.

Bill I think businesses come to the banks for loans.

Smith You are right. Banks make loans to corporations, to organizations, individuals and to small companies. For this service, we always charge interest.

Bill But how can a bank decide whether a business should receive a loan.

Smith First of all we request a financial statement. It shows what the company has in inventory, accounts receivable and other assets and liabilities. Profit and loss statement shows the company’s income and expenses.

Bill In other words you look over the financial situation of a business.

Smith Exactly. If the company is eligible for a loan, it may choose a long-term loan or a short-term loan.

Bill I see. And how much interest does the bank charge on these loans?

Smith It can be different. We have so-called prime-rate, that is the lowest interest rate available at the particular time. Only preferred customers can have it.

Bill Who decides on prime-rate then?

Smith Major lending banks do.

Bill Oh, I must know that. And very often I hear the term «a line of credit». I have a vague idea what it is.

Smith A line of credit is the maximum amount of money that a company can borrow from a bank. This top amount of customer’s credit is based on the profits and earnings of a business.

Bill Well. Then it is very important to have a good line of credit, isn’t it?

Smith Sure. A bank also issues letters of credit. Such letter says that its holder can borrow up a certain sum of money. Or a bank can also issue a letter of credit for a person who goes to the other country where another bank is involved. Then there is the credit reference letter which recommends a company to its suppliers, and well -I could go on all morning.

Bill Thank you. It’s very useful information.

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Smith O.K. We can pass on to a more complicated subject. That is tax service.

Active Vocabulary

banking— банковское дело

to make a career in smth.- сделать карьеру в чем-либо

bank services— банковские услуги

checking account— чековый счет

savings account— сберегательный счет с установленным процентом

safety deposit box— сейф для депозитов, предоставляемый частным лицам в банке

insurance- страхование

to make a loan to smb.- давать заем кому—либо

to be eligible for a loan— подходящий для займа (т.е. признаваемый платежеспособным)

long—term loan— долгосрочный заем

short—term loan— краткосрочный заем

prime—rate— наименьший процент со ссуды, установленный в определенное время и в определенном месте

preferred customer— привилегированный клиент

to be available— наличный, имеющийся в распоряжении

line of credit- кредитный лимит

to borrow- занимать

letter of credit- кредитное письмо, аккредитив

credit reference letter- рекомендательное кредитное письмо