Английский язык = English. Учебное пособие-1

Exercise 2. Define the part of speech of the words ending in -er.

Translate them.

Partner, bigger, producer, customer, other, easier, clearer, weaker, lighter, offer, lower, later, stockholder, greater, employer, nearer, whether, letter, refer, render, paper, however, further, order.

Exercise 3. Translate the following sentences.

1.The Protocap made by Victoria’s subsidiary company was cheaper to produce in Dreamy than in Leeds.

2.The manager wanted to know why the company whose turnover had increased was making less profit.

3.The London Stock Exchange is the most important UK market for company shares and government stocks.

4.Interest rates on long-term loans are generally higher than those on short-term loans.

5.The economy is becoming increasingly dependent on the groups that often receive the poorest education.

6.Sooner or later, however, Campbell may get regionalization just right.

7.With fewer high-level slots and regions to send executives to, Exxon’s grooming of future leaders is more difficult.

8.While there may be no accounting for such intangibles as better quality, greater flexibility, faster time to market, quicker order processing, and higher customer satisfaction those factors contribute mightily to the bottom line and deserve to be backed by capital infusions.

9.If a company endeavours to reduce its overhead by adding more product lines to spread costs thinner, the numbers do come out better.

10.More has to be done to enable nation’s schools to prepare students for life and work.

Exercise 4. Put the adjectives in the correct form. Translate the sentences.

1.The situation will be (urgent) by Friday.

2.We are doing our (well) to find the solution.

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3.They wanted (specific) information.

4.(Late) next year, we shall probably have to install another company on the system.

5.Depending on what percentage is used, the company will look (much) or (little) profitable.

6.Recent rule changes make a company’s liabilities look (large).

7.Saving money in taxes is (important) than showing the (high) profit possible.

8.Since the FIFO* method results in (high) profits, the company should be using FIFO so that profits will look (good) they can.

*FIFO – first in, first out

Exercise 5. Look at these examples and decide how big or small the difference is between the two things we are comparing. Note some ways of pointing out their disadvantages.

1.а) Swan Airlines flight is a lot more expensive than Bluebird Airways flight.

b)Flying Swan Airlines is a great deal cheaper than flying Bluebird Airways.

c)Swan Airlines fly much more frequently than Bluebird Airways.

d)Phoenix Airways is a bit quicker than Bluebird Airways.

e)Bluebird Airways is a little cheaper than Phoenix Airways.

2.a) British Skyways are faster than Condor. The only trouble is, they are rather expensive.

b)Inland Airways are cheaper than Bluewind. The only problem is, you have to change.

c)Inland Airways leave earlier than Bluewind. The only thing is, it takes along time to go there.

Exercise 6. Compare the following things.

1.The British bank and the Continental bank (exchange rate).

2.The London Stock Exchange and the New York Stock Exchange (shares).

3.Dollar loans and local currency loans (risk).

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4.UK investor’s guarantee and Primrose Group’s guarantee (purchase of assets).

5.Board members’ and the Group’s long-term strategy (decision).

Exercise 7. Make up sentences of your own about the following things. Use comparative degree of adjectives.

1.Borrowing in dollars and borrowing in local currency.

2.Purchasing and selling shares.

3.Investing at home and abroad.

4.Borrowing from British bank and borrowing from foreign bank.

5.Having assets in local currency and having assets in dollars.

Exercise 8. Find the meanings of the following words with a dictionary. Learn them.

Which, that, till, when, since, where, if, as long as, although, though, who.

Exercise 9. Translate the following sentences.

1.Don’t give an answer till you speak to your boss.

2.Since you insist on it I shall go there today.

3.The sales were still low when we spoke to the manager.

4.The subsidiary was set up where the partners advised.

5.If the controller comes, tell him to wait in my office.

6.This gives an amount of the money which is given to political parties.

7.The huge decline in the wages of America’s unskilled labour force shows that it is no longer competitive in the international economy.

8.If we sit back we’re in for some problems.

9.When borrowings are a bigger portion of a company’s capital structure, earnings from debt-financed projects are distributed over a proportionally smaller equity base.

10.Many revenues and expenses result from accruals and cost allocations that do not affect cash.

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Exercise 10. Complete the sentences with the only choice of preposition.

1.He asked the foreign Exchange clerk what $ 300 was… Swiss francs (by / in / with / as).

2.Assessment of risk depends… the sort of country you are dealing with (to / with / of / on).

3.Several banks were involved… the fraud (in / with / by / over).

4.In the… revolution period, many countries faced considerable hardships (after / post / before / successive).

5.The audit was carried… in July (over / on / out / off).

6.The project will be completed… six months (within / inside / before).

7.The rule applies… all Companies in EC countries (to / for / with / in).

8.They sold the car… cash (with / for / in / at).

9.The project went ahead… the help of a bank loan (with / by / through).

10.Several new companies were formed… joint ventures… third parties (with / through / under / by); (by / with / from / of).

READING SECTION

I. Read and translate Text A.

TEXT A

The Statement of Cash Flows

Another important financial statement – the statement of cash flows – also may be useful to investors and other financial statement users.

The balance sheet is a static statement, analogous to a snapshot of a business at a point in time. The income statement, statement of retained earnings or stockholders’ equity, and statement of cash flows are statements of flows during a period of time; these statements are more comparable to movies than to snapshots. The statement of cash flows is a much broader flow statement than the income statement. Whereas the income

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statement measures the profitability of a company’s primary (and peripheral) operating activities, the statement of cash flows reports the cash flows from these and other activities.

The statement of cash flows provides useful information about the following activities and company characteristics:

1.Cash provided by or used by operating activities. While income as reported in the income statement is of primary importance to users in evaluating performance, many revenues and expenses result from accruals and cost allocations that do not affect cash. For example, depreciation expense does not cause an outflow of cash, although it appears on the income statement. The statement of cash flows provides useful information about the cash generated from a company’s primary operating activities and may help to answer the following types of questions:

a)If company operates at a profit, why is it continually short of cash?

b)How can a company operate at a loss and still generate huge inflows of cash from operations?

2.Cash provided by or used by investing activities. The statement of cash flows can provide information needed to answer the following questions about investing activities:

a)Is the company making capital expenditures to modernize, expand, or replace worn-out or obsolete plant and equipment?

b)Did the company acquire any long-term investments or other income-producing assets?

c)Did the company obtain cash from disposal of longlived assets? If so, how much?

3.Cash provided by or used by financing activities. The statement of cash flows can provide answers to the following types of questions about a company’s financing activities:

a)Was financing obtained during the period through the issuance of debt or equity securities? If so, what were the amounts of cash obtained?

b)Did the company use cash to retire any long-term debt or equity securities during the period?

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Answers to these questions are not provided by the income statement and may not be easily obtained by analysis of successive balance sheets.

4.The “quality” of earnings. The quality of earnings refers to how closely income is correlated with cash flows – the higher the correlation, the higher the earnings quality. A comparison of net income with cash generated from operating activities may provide useful information for assessing the quality of earnings.

5.Evaluation of solvency, liquidity, and financial flexibility.

Solvency is the ability of a company to pay its debts as they mature. Liquidity is the ability to generate adequate amounts of cash for specific purposes and also refers to assets’ and liabilities’ “nearness to cash”. Financial flexibility refers to a company’s ability to adapt during a period of financial adversity, to obtain financing, to liquidate non-operating assets for cash, and to modify operations to increase short-run cash inflows. The statement of cash flows helps users evaluate solvency, liquidity, and financial flexibility [15, p. 193].

Exercise 1. Answer the questions.

1.What kind of information does the statement of cash flows provide?

2.How is the statement of cash flows compared to the income statement?

3.How is the statement of cash flows compared to the statement of retained earnings?

4.What does not affect cash?

5.Why is the statement of cash flows helpful to users?

6.What answers can the statements of cash flows provide?

Exercise 2. Find the sentence in the text which says what the quality of earnings is.

Exercise 3. Connect two parts of sentences. Translate them.

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Exercise 4. Give the definitions to the following terms.

a)solvency;

b)liquidity;

c)financial flexibility.

II. Read Text B and say if the following statements are true or false.

1.The primary purpose of the statement of cash flows is to provide information about a company’s cash flows.

2.Cash flows from operating activities are generally the cash effects of transactions and economic events included in the determination of income.

3.Operating activities relate to lending money and collecting on those loans.

4.Financing activities include borrowing money from creditors and repaying the amounts borrowed.

5.Investing and financing transactions must not be reported.

6.Statement № 95 does not permit the use of the indirect approach.

7.Income taxes paid are reported under the indirect approach.

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TEXT B

Overview of the Statement of Cash Flows

The primary purpose of the statement of cash flows is to provide information regarding a company’s cash inflows and outflows during an accounting period. The statement must provide cash flow information about a company’s operating, investing, and financing activities. In an effort to be responsive to the common practice of investing idle cash in highly liquid assets, Statement № 95 requires that companies treat cash and cash equivalents as a single pool for reporting purposes. It defines cash equivalents as short-term, highly liquid investments that are readily convertible to known amounts of cash.

The statement of cash flows should be based on an activity format, which means that cash inflows and outflows should be classified in terms of operating, investing, and financing activities. Operating activities relate to a company’s primary revenue-generating activities. Cash flows from operating activities are generally the cash effects of transactions and economic events included in the determination of income. Investing activities include lending money and collecting on those loans, buying and selling productive assets that are expected to generate revenues over long periods, and buying and selling securities not classified as cash equivalents. Financing activities include borrowing money from creditors and repaying the amounts borrowed, and obtaining resources from owners and providing them with both a return on their investment (through dividends) and a return of their investment.

Exhibit 6 – 3 summarizes the types of transactions that appear on the statement of cash flows. Investing and financing transactions not affecting cash, such as the issuance of common stock to acquire land, must be reported either in a supplementary schedule or in a narrative footnote.

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EXHIBIT 6 – 3

Cash flows by major activities

Two approaches may be used to report cash flows from operating activities – the direct approach and the indirect approach. Statement № 95 encourages the use of the direct approach but permits the use of the indirect approach as an alternative. Under the direct approach, at a minimum the following major sources of operating cash inflows and outflows are reported:

1.Cash collected from customers and cash collected from lessees, and similar parties.

2.Interest and dividends received.

3.Any other operating cash receipts.

4.Cash paid to employees and other suppliers of goods or services, including suppliers of insurance, advertising, and similar services.

5.Interest paid.

6.Income taxes paid.

7.Any other operating cash payments.

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Companies that use direct approach must also present the indirect approach in a supplementary schedule to the statement of cash flow. Under the indirect approach, cash flows from operating activities are reported by adjusting net income for revenues, expenses, gains, and losses that appear on the income statement but do not have an effect on cash. In addition, net income is adjusted for operating cash inflows and outflows that do not appear on the income statement. Companies that use the indirect approach also must disclose in footnotes the amounts of interest and income taxes paid [15, pp. 192, 1068].

Exercise 1. Name the types of transactions that appear on the statement of cash flows.

Exercise 2. Learn Exhibit 6 – 3 and speak on:

a)pool of cash;

b)inflows and outflows;

c)operating activities;

d)investing activities;

e)financing activities.

Exercise 3. Make up a plan of Text B and retell the text.

Exercise 4. Speak on approaches to report cash flows from operating activities:

a)direct approach;

b)indirect approach.

III. Read Text C and say how many steps of the preparation of the statement of cash flows should be done.

TEXT C

Preparation of the Statement of Cash Flows

In this section we discuss how to prepare the statement of cash flows.

The following information describes events and transactions affecting the company during 1992:

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