94700

CORPORATE FINANCE

Конспект урока

Иностранные языки, филология и лингвистика

A corporation can 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 whether the business is profitable or not. When running a corporation, management must consider both the outflow and the inflow of the capital.

Английский

2015-09-15

85 KB

0 чел.

4

Lesson 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 "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 the success of the company. The greater the success, the more value the shares have.

A corporation can 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 whether the business is profitable or not.

When running a corporation, management must consider both the outflow and the inflow of the 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

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, 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 денег

outflow

утечка денег

inventory

материально-производственные запасы

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 inflow?
  7.  Why is the risk involved an important factor in determining fund raising.

Vocabulary Practice

Choose the necessary word and put it into the sentence.

  1.  … funding is a financing formed by borrowing.
  1.  equity
  1.  They have borrowed much money and they have to pay a big … .
  1.  negotiable
  1.  Financing by shares is called … funding.
  1.  interest
  1.  That is a very profitable deal, for that purpose we need extra … .
  1.  inventory
  1.  You can sell your shares and … . They are … .
  1.  funding
  1.  The current assets of the company usually include cash and … .
  1.  inflow
  1.  As a result of this deal we'll have greater … than outflow.
  1.  bonds
  2.  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

OK. I think I should explain to you a little about corporate finance.

Mary

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

Frank

If a corporate enterprise wants to expand it need 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 the 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 anything 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’ve studied their annual report and I can say 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 I want to sell my shares very soon?

Frank

No problem. Undoubtedly you can make 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 Annual Report of the company. You need several days for that. Then we'll meet and talk again.

Active Vocabulary

stockbroker

биржевой маклер

if it concerns smth.

если речь идёт о чём-то

loan

заем, ссуда

partial owner

совладелец

Annual Report

годовой отчёт

to pay dividends

платить дивиденды

long-term investment

долгосрочный вклад

to make a profit on the sale

получить прибыль при продаже

Vocabulary Exercises

Exercise 1. Make up a sentence according to the model.

Model: How should the company pay the expenses? (borrow from the government)

The company should pay the expanses by borrowing from the government.

  1.  How can we form an equity funding? (issue shares)
  2.  How can a business sell more shares of stock? (offer a dividend)
  3.  How should we know about the financial state of the company? (look over the Annual Report)
  4.  How should he invest his savings? (buy common stock)
  5.  How should they make people buy their bonds? (increase the interest)
  6.  How can this company make a profit? (raise investment capital)

Exercise 2. Respond to the following statements according to the model.

Model: It takes a month to sell the bonds.

You need a month to sell the bonds.

  1.  It will take a half of the year to pay off the debts.
  2.  It takes her several days to count up net assets.
  3.  It won't take the company much time to repay the loan.
  4.  It will take him the rest of his life to learn how to run the corporation.
  5.  It takes them 2 days to sell the goods.
  6.  It will take them much time to decrease the outflow.
  7.  It will take him a month to raise the capital.

Exercise 3. Answer the questions.

  1.  What kind of funding is preferable: equity or debt?
  2.  What shares of what enterprise in your own town would you buy? Why.
  3.  Imagine that your business is going to get capital funds by borrowing. What bond interest would you charge?
  4.  What should you do to produce more inflow of capital?
  5.  How can you calculate the net assets of your enterprise?
  6.  What traits of character does a stockbroker need?

Grammar Exercises

Exercise 1. Make the sentence negative.

  1.  They were discussing the possibility of the purchase of inventory from 5 till 6 p.m. yesterday.
  2.  He was running the corporation during two months.
  3.  During our last classes the lecturer was speaking about equity funding.
  4.  Our accountant was calculating assets, liabilities and net worth two days before yesterday.
  5.  They were electing the new Board of Directors for two hours at their annual meeting.

Exercise 2. Put up 4 questions of different type.

  1.  The company was doing extremely well when he was the manager.
  2.  I was examining the Annual Report when Mr. Stevenson called on me.
  3.  She was making a profit on the sale of the goods till she could get them.
  4.  He was holding a position of a stockbroker when I met him last year.
  5.  The shop was attracting many customers when famous companies supplied it.
  6.  They were investing money in this business for two years.

Translate 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.  Акции и облигации могут быть переуступлены, куплены, проданы.
  4.  Я хочу купить десятипроцентные 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 идёт о моих деньгах, я изучу годовой отчёт компании.


 

А также другие работы, которые могут Вас заинтересовать

16889. Расчет силовых смещений корпуса шпиндельной бабки токарного станка 119 KB
  Расчет силовых смещений корпуса шпиндельной бабки токарного станка 1.Описание конструкции шпиндельной бабки токарного станка 16К20 Шпиндельная бабка токарного станка 16К20 предназначена для базирования подшипников шпинделя а также для передачи вращения от шкива ремен
16890. Основные настройки текстового процессора Writer 144.5 KB
  Лабораторная работа №1 Основные настройки текстового процессора Writer Оборудование: ПК Программное обеспечение: Windows OpenOffice.org Writer. Цель работы: приобретение и закрепление практических навыков работы во Writer Теоретическая часть. Для корректной работы OpenOffice с русским я
16891. Основные операции по форматированию текстовых документов в OpenOfficeorg Writer 57 KB
  Лабораторная работа №2Основные операции по форматированию текстовых документов в OpenOffice.org Writer Оборудование: ПК Программное обеспечение: Windows OpenOffice.org Writer. Цель работы: приобретение и закрепление практических навыков работы в OpenOffice.org Writer Указания к выполнению работы:...
16892. Представление информации в табличной форме во Writer 112 KB
  Лабораторная работа №3Представление информации в табличной форме во Writer Оборудование: ПКПрограммное обеспечение: Windows OpenOffice.org WriterЦель работы: приобретение и закрепление практических навыков работы в текстовом процессоре OpenOffice.org Writer Теоретическая часть Таблицы Writ...
16893. Использование графических объектов в документах Writer 77 KB
  Лабораторная работа №4Использование графических объектов в документах Writer Оборудование: ПКПрограммное обеспечение: Windows OpenOffice.org WriterЦель работы: приобретение и закрепление практических навыков работы в текстовом процессоре Writer Задание: 1. Перекопируйте папку ЛР...
16894. Табуляция во Writer. Формулы 101.5 KB
  Лабораторная работа № 5Табуляция во Writer. Формулы Оборудование: ПКПрограммное обеспечение: Windows OpenOffice.org WriterЦель работы: приобретение и закрепление практических навыков работы в текстовом процессоре Writer Задание 1. 1. Перекопируйте папку ЛР_5 на диск H: в папку ИТ 2. Откр
16896. Подготовка документа к печати 179.41 KB
  Подготовка документа к печати Оборудование: ПКПрограммное обеспечение: Windows OpenOffice.org WriterЦель работы: приобретение и закрепление практических навыков работы в текстовом процессоре Writer Ситуация. Вам нужно срочно подготовить материал в печать или реферат по опред...
16897. Подготовка документа к печати. Урок 20.16 KB
  Тема Подготовка документа к печати Цели урока: 1 обучающие: Освоить дополнительные возможности OpenOffice.org Writer; Научиться быстро и качественно готовить документ к печати; 2 развивающие: повышение общего образовательного уровня в области офи