FINANCE AND ACCOUNTANCY

UNIT 1. FINANCE vs. FINANCES

Lesson 1

Task 1. a) The word “FINANCE” has a wide range of meanings:

Money that is used to pay for something such as a large project

b) Singular or plural?

WHICH WORD?

FINANCE vs. FINANCES

Finance [`faınænts] 81% / [faı`nænts] 19% – the system of money, credit, etc., especially with respect to government revenues and expenditures; funds or the provision of funds; Finances [`faınæntsız] / [faı`næntsız] – the money available to a person, an organization or a country; the way this money is managed.

Task 2. Translate the sentences taking into account the meanings of the word “FINANCE”:

1. Фінанси, (фінансові) засоби; управління фінансами; фінансування; фінансова система; грошові відносини; кредитування; кредит; фінансовий відділ (компанії); наука про фінанси, фінансова справа;

2. фінанси, доходи, гроші, бюджет;

1. The government’s poor management of public finance lost it the election. 2. The project will only go ahead if they can raise the necessary finance. 3. It is not yet clear where finance for the project will come from. 4. The company is searching for international sources of finance. 5. We are now trying to raise finance for more research projects. 6. The company’s finance committee is convening a meeting. 7. Students need to be taught how to handle their finances. 8. A group of banks will provide finance for the takeover. 9. He’s now studying international banking and finance. 10. The company is battling to put its finances in order. 11. To take stock of your finances means to make an inventory of your total worth. 12. The college has had to close due to lack of finance. 13. Buying new premises put a strain on our finances. 14. My finances are in a terrible mess at the moment. 15. Mr Harris is the company’s new finance chief. 16. I’ve got a diploma in banking and finance. 17. She works in the finance department. 18. Her personal finances are in a mess. 19. Finance involves the securing of funds for all phases of business operations. 20. A family budget is a working plan for allocating the family finances during the year.

Task 3. Match the phrases in column A with their Ukrainian equivalents in column B:

A	B
to put finances in order to provide finance (for) to allocate finance to handle finances to take stock (of) to raise finance	забезпечувати фінансування; залучати засоби; здійснювати (пере)облік фінансів; керувати / розпоряджатися власними коштами; контролювати власний бюджет; профінансувати (щось); привести в порядок фінанси; розміщувати, розподіляти, призначати; асигнувати фінанси;

Task 4. Think and answer.

1. Why is it important for families to take stock of their finances?

2. Who is responsible for allocating finances in your family?

3. How can a person learn to handle his / her finances?

4. What is needed to put your finances in order?

5. Have you ever raised finance for a project?

6. Who provides finance for your tuition?

Task 5. Translate into English.

1. Управління державними фінансами є важливою функцією уряду. 2. Мої фінанси у скрутному становищі (“Мої фінанси співають романси”). 3. Новий фінансовий директор з усіх сил намагається привести фінанси компанії в порядок. 4. Фінансовий комітет обговорює питання пошуку нових джерел фінансування. 5. Проект буде успішним, якщо ми зможемо забезпечити фінансування. 6. Той, хто не вміє розпоряджатися власними коштами, має мало шансів на успіх у бізнесі. 7. В університеті я вивчав банківську справу і фінанси. 8. Поки що не зрозуміло, хто забезпечить фінансування нового проекту. 9. Витрати на моє навчання в університеті позначилися на нашому сімейному бюджеті. 10. Брак фінансів у компанії ставить завдання їхнього ефективного розподілу (розміщення).

Task 6. a) The following words frequently occur in front of “FINANCE”.

mezzanine debt mortgage FINANCE public equity consumer high corporate

b) Which of the above word combinations means:

• the business of lending money to customers so that they can buy goods to pay for them later;

• the activity of helping companies to get the money they need in order to run and develop their business;

• a field of economics concerned with paying for collective or governmental activities;

• money that a company borrows from banks, investors, etc. in order to finance its activities; the business of providing this money to companies;

• money that a company gets by selling shares in order to finance its activities; the business of helping companies get money in this way;

• business activities which involve very large amounts of money;

• a way of providing funds for a business that involves lending money with a high rate of interest and often with the right to obtain shares in the business in the future;

• money lent to people or organizations to buy property?

Task 7. a) Match the terms in column A with their translation in column B:

A

B

mezzanine finance corporate finance consumer finance mortgage finance public finance equity finance debt finance high finance

споживчий кредит; державні фінанси, державний бюджет; мезонінне (проміжне) фінансування; субордино-ваний борг; іпотечне фінансування; рефінансування іпотеч-ної заборгованості; великі (значні) фінансові операції; фінансова аристократія; велике шахрайство; корпоративне фінансування; корпоративні фінан-си; фінанси підприємств / компаній / приватних корпорацій; боргове фінансування; кредитне фінансування; кредитування; фінансування боргу; фінансування шляхом залучення позикових коштів; фінансування проектів за рахунок випуску нових акцій; фінансування за рахунок власного капіта-лу; фінансування проекту шляхом вливання акціонерного капіталу; фінансування шляхом участі на паях у капіталі;

b) Translate into Ukrainian paying special attention to the words in italics.

1. The proper role of government provides a starting point for the analysis of public finance. 2. Public finance is closely connected to issues of income distribution and social equity. 3. Consumer finance in the most basic sense of the word refers to any kind of lending to consumers. 4. Consumer finance can include just about any type of lending activity that results in the extension of credit to a consumer. 5. The retailer wants to sell off its consumer finance unit. 6. Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. 7. The primary goal of corporate finance is to maximize corporate value while managing the firm’s financial risks. 8. He followed a career in corporate finance. 9. He joined the corporate finance arm (= department) of KPMG in 2008. 10. It is now more difficult for smaller companies to attract investors and raise equity finance. 11. The bank’s equity finance division is expanding its activities. 12. The two main providers of equity finance for private businesses are venture capitalists – also known as private equity firms – and business angels. 13. Equity finance is a way of raising share capital from external investors in return for handing over a share of the business. 14. The company has secured debt finance from Royal Bank of Scotland to fund the deal. 15. She is head of the bank’s debt finance division. 16. Debt finance is achieved via agreed extended credit terms with your suppliers, provided that you have a close relationship with them. 17. Investment in the future expansion of the gas industry worldwide will depend on a combination of private equity finance, state-provided capital, and commercial debt finance. 18. It’s not easy to enter the world of high finance. 19. They’re a big name in high finance. 20. Mezzanine finance carries more risk for the lender and is more expensive to the borrower than ordinary loans. 21. Mezzanine [`metsəni:n] / [`mezəni:n] finance is used to describe forms of finance that have characteristics of both debt and equity. 22. Mezzanine [`metsəni:n] / [`mezəni:n] finance can be particularly useful to fast growth companies. 23. Mortgage [`mO:gıG] finance is finance for investment in buying, building, reconstructing or improving building and administrative units. 24. One of the advantages of mortgage [`mO:gıG] finance is the longest payment period as compared to other systems. 25. The news reported bankruptcy of another mortgage [`mO:gıG] finance giant.

Task 8. Try to make difference between the following interrelated concepts.

1. What is money? Which forms can it take?

2. Is money and capital the same thing? Which money is called capital?

3. Is the money you possess your capital? Can capital take any form of material wealth (including movable property and real estate)?

4. How does capital differ from finance?

5. What is the difference between “finance” and “finances”?

Task 9. a) Study the following words

.

Which word?

Share vs. Stock

Either shares (plural) or stock (uncountable) can be used to describe the amount of a company that a person owns or a company’s value on the stock exchange (основний капітал; акціонерний капітал; пакет акцій; фонди – частина сумарного акціонерного капіталу, що належить певній особі або групі осіб). In this sense shares is more common in BrE and stock – more common in AmE. Share, NOT stock, is used when talking about a particular number of shares in both BrE and AmE (акція; частка; пай). In BrE, the phrase stocks and shares (акції та облігації) means “bonds and shares”. This meaning of stock is also found in other phrases: a company’s loan stock; government stock. The AmE expression for “bonds and shares” is stocks and bonds.

b) Translate into Ukrainian paying special attention to the words in italics.

1. They invested their money in stocks and bonds.

2. The bank holds 60% of the company’s shares / stock.

3. The publisher’s stock rose to $25 a share.

4. They got a profit of $3.75 a share.

5. The company boasts 1.2 billion shares.

Task 10. Practice reading the following words.

although [O:l`ðəu] / [O:l`ðou] to borrow [`bOrəu] / [`bO:rou] consideration [kənֽsıdə`reı∫ən] corporate [`kO:pərət] device [dı`vaıs] earnings [`ə:nıŋz] enough [ı`nAf] entity [`entəti] expenses [ık`spentsız] external [ık`stə:nəl] finance [`faınænts] 81% / [faı`nænts] 19% to finance [faı`nænts] hence [hents] ingredient [ın`gri:diənt] internal [ın`tə:nəl] interrelated [ֽıntərı`leıtəd] inventories [`ınvəntəriz]

loan [ləun] / [loun] managerial [ֽmænə`Gıəriəl] necessary [`nesəseri] offer [`Ofə] / [`O:fər] ongoing [`Onֽgəuıŋ] / [`α:nֽgouıŋ] primary [`praıməri] profits [`prOfıts] / [`prα:fəts] property [`prOpəti] / [`prα:pərti] proprietorship [prə`praıətə∫ıp] to receive [rı`si:v] to rein­vest [ֽri:ın`vest] retained [rı`teınd] securing [sı`kjuərıŋ] statesman [`steıtsmən] sufficient [sə`fı∫ənt] truth [tru:θ] utilizing [`ju:tılaızıŋ] to view [vju:]

Task 11. Read the text. What is Finance? (Part I)

“And statesmen as well ought to know these things; for a state is often as much in want of money and of such devices for obtaining it as a household, or even more so; hence some public men devote themselves entirely to finance.”

(4^th Century BCE – Aristotle [`ærıstOt^əl] – Politics, Book I, Part XI,)

The field of finance refers to the concepts of time, money and risk and how they are interrelated. One of the key ingredients here is money.

Indeed, finance is often defined as money borrowed from a bank, received from investors, etc. in order to run a business, complete an activity or buy something. It is also viewed as the activity of managing money, especially by a commercial organization or a government.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations.

Managerial or corporate finance is the task of providing the funds for a corporation’s activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity’s wealth and the value of its stock. Finance, in this case, is securing and utilizing capital to start up, operate, and expand a company.

Most people go into business to make money – to make profits. But there is some truth to the old say­ing, “It takes money to make money.” That is why money is one of the primary considerations when going into business.

Without sufficient funds a company cannot begin opera­tions, meet day-to-day expenses, and expand. The money needed to start and continue operating a business is known as capital. Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service.

A new business needs capital not only for ongoing expenses but also for purchasing necessary assets. These assets – inventories, equipment, buildings, and property – represent an investment of capital in the new business.

Some money a business uses will come from internal funds; other money might come from external funds. Most of the money a business uses for its expenses comes from the sale of its products and services. Since these funds come from the operation of the business, they are described as internal funds.

The funds that remain after paying expenses are a firm’s profits or earnings. Although the owners could keep all of the profits for themselves, in most instances the business will rein­vest some of them in the business. These funds are called retained earnings and are considered internal funds.

About 60 to 80 percent of a firm’s financing comes from its internal sources. The rest must come from outside, or external, sources.

Even the most successful busi­nesses need to use external funds when they are starting or expanding. At times there is not enough money coming in to cover operating costs. When this happens, firms do three basic things:

• borrow;

• sell shares of stock (if it is a corporation) or seek additional capital from the owners (if it is а partnership or proprietorship);

• reduce spending.