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.

FrankNever 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.

MaryBut why do they need my investment if they are doing so well?

FrankO.K. I think I should explain you a little about a corporate finance.

MaryGo ahead. If it concerns my money I am always interested.

FrankIf a corporate enterprise wants to expand it needs financing.

MaryYou are right.

FrankSo there are two basic types of financing: equity and debt.

MaryWhat's the difference between them?

FrankIf 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.

MarySo as investor, what am I?

FrankWell, 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?

FrankOh 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.

MaryThanks a lot, Frank. I will. Does this company pay dividends on its stock?

FrankYes. 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.

MaryBut if 1 want to sell my shares very soon?

FrankNo 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.

MaryThank you for your advice. You are wise as usual.

FrankWell, 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