7. Explain in English the flow chart. Ask five questions to your partner

Accounting process

Financial statements

8. Use the verbs in correct forms (infinitive or gerund)

1. It is important (know) your cash so that you may adequately (plan) your expenditures.

2. (Know) the financial health of your company is important.

3. Financial managers are responsible for (plan) how and when cash will be used.

4. Return, which is a key factor may be used (evaluate) the expected return.

5. Valuation is the process of (determine) the value of asset.

6. If revenue from services has been sharply declining over the past several months, you will probably want (know) why and when take action (reverse) the trend.

7. The probability theory may be used (evaluate) the expected return.

9. Translate the following sentences into English

1. Финансовый анализ — это изучение основных параметров и коэффициентов, дающих объективную оценку финансового состояния предприятия, а также анализ курса акций предприятия, с целью принятия решения о размещении капитала.

2. Для эффективного управления предприятием необходима полная осведомленность руководства о процессе деятельности организации.

3. Бесплатные анализы деятельности организации, проводимые собственными силами весьма полезны.

4. Однако проводить анализ хозяйственной деятельности с привлечением специализированных предприятий, проводящих качественный аудит также необходимо.

5. Финансовый анализ предприятия требует более глубокого подхода и познаний.

6. Финансовый аналитик — профессиональный эксперт-экономист, специалист по определенному сектору рынка.

7. В его обязанности входит исследование компаний, выпускающих акции и подготовка рекомендаций по покупке, продаже или удержанию ценных бумаг.

10. Home reading. Read and translate the text. Be ready to discuss the contents of the text

Solvency is the company’ s ability to satisfy long-term debt as it becomes due. Another important consideration is financial leverage, the size of debt in the company’s capital structure. (Capital structure is the mix of long-term sources of funds used by the company). These ratios are measures of a firm’s degree of indebtedness.

The debt ratio is computed by dividing the total debt or liabilities of the business by the total assets. This ratio shows the proportion of the total assets financed by the creditors.

Total Debt

_____________________________

Total Assets

A debt-to-asset ratio that is too high tells the financial manager that the changes for securing additional borrowed funds are poor. Pressures from creditors may soon restrict the firm’s activities.

An important characteristic of a firm is its ability to meet obligations to short-term creditors when such obligations mature or come due. The less liquid the firm, the greater the risk. Debt obligations are paid in cash, and thus the firm’s cash flow ultimately determine solvency.

Current ratio is computed by dividing the current assets by the current liabilities. It is a measure of a company’s ability to meet its current debt from its current assets. An unusually low current ratio indicates that a company may face some difficulty in meeting its bills; an unusually high current ratio suggests that the funds are not being used economically within the firm. There may be excessive amounts of inventory on hand, some of which may be obsolete or slow-moving, or the amounts of receivables may be excessive.

Quick (acid-test) ratio is a measure that puts more severe limitations on calculating the liquidity of a firm.

Another group of financial ratios is called Asset Utilization Ratios or Turnover Ratios. These measures reflect the way in which a company uses its assets to obtain revenue and profit. There are several ratios of this kind.

(1) Inventory turnover is also known as inventory turns, stockturn, stock turns, turns, and stock turnover.

Inventory turnover is computed by dividing the cost of goods sold by the yearend inventory. In this way we can determine how rapidly funds flow through the inventory pool and how current that inventory is. A low turnover rate may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort. However, in some instances a low rate may be appropriate, such as where higher inventory levels occur in anticipation of rapidly rising prices or shortages. A high turnover rate may indicate inadequate inventory levels, which may lead to a loss in business.

This turnover indicates whether the inventory is deficient or excessive in relation to the volume of sales: Cost of Goods Sold

Inventory

(2) Accounts receivable turnover: __Total Debt__

Total Assets

(3) Total asset turnover: Sales

________________________

Average total asset