English for finance 2 mrs mai

TIẾNG ANH CHUYÊN NGÀNH UNIT 16 Concept/ Functions/ Objectives of corporate finance? a Concept: Corporate finance refers to financial decisions of companies: how to best raise and spend the company funds b Functions and Objectives: - Functions: + Develop / Raise a sufficient operating budgets + Ensure effective use of financial resources available to the Co + Supervise (in coordination with other departments) all financial activities - Objectives: + Ensure smooth daily operation and future investment plans + Maximize revenue and benefits + Minimize costs and expenses + Timely track income and expense arisen from business dealings + Promote the wise use of all financial resources Two major ways of raising funds for a Equity financing: corporation? The way companies raise funds by issuing and selling stocks to investors, using retained earnings or mobilizing venture funds b Debt financing: Company funds can be raised by borrowing from creditors or by issuing bonds for debentures The tasks of finance managers in the monitoring the finance? a Activities: - Supervising, controlling financial activities and conditions - Evaluating effects caused by financial decisions b - Suggesting necessary solutions and adjustments for business improvements Objectives: Minimize the costs wastage and misuse of finance, the risks of investments Maximize the financial efficiency, the return on finance and profitability UNIT 17 What is the gearing? When is it high/low? (over-leverage/ under-leverage) - Gearing: It is the relationship between the company’s equity capital and long- term debts High when: borrowing/ issuing bonds Low when: issuing/ selling stocks How are types of equity capital? How are they generated? - Owner’s capital is the money invested by the owners of the company - Venture capital is provided by the venture firms - Besides, companies can issue and sell stocks on listed or unlisted securities markets What are advantages and disadvantages or owner’s capital/ venture capital/ listed security market? a Venture capital: - Advantages: + It is great chance to raise big funds + The venture firms not usually interfere in the company operation - Disadvantages: + Venture firms demand high profit and fast growth + There is low percentage of the fund gainers b Stocks vs Bonds STOCKS BONDS Stocks represent the company’s partial ownership - - The stockholders are the company’s owners They are entitled to receive dividends, to have voting right, to control & supervise the Co operation and join AGM - What are long-term debts? What are their advantages and disadvantages? - Bonds represent the company’s debt The bondholders are creditors/lenders They have no right to interfere in the Co management but receive regular fixed interest and get back principal at maturity Long-term debt consists of loans and financial obligations lasting over one year Longterm debt for a company would include any financing or leasing obligations that are to come due after a 12-month period Long-term debt also applies to governments as nations can also have long-term debt - Advantages: Long-term debts satisfy the demand for capital for expenses and investments In times of prosperity they can raise net profits and owners’ funds - Disadvantages: Borrowers must secure the debts over the fixed assets (collateral), bear high interest, so in difficult times this may soak up all profits, cause loss or bankruptcy UNIT 18 What is working (current/ floating/ circulating) capital? How is it classified? a Concept: Working capital consists of inventories and liquid resources needed by a company to carry out trading or production b types of working capital: Permanent working capital Temporary working capital Is tied up in keeping the business flowing throughout the year  Is needed from time to time to deal with seasonal, cyclical or unexpected fluctuations in the business Both type of working capital have major applications: inventories, debtors, cash + Inventories include raw materials, work in progress, finished goods + Debtors include payment due to suppliers (accounts payable), payment owed by customers (accounts receivable) + Cash What are the tasks of the CFO in managing inventories/ debtors? a Inventories: - Provide the correct amount of working capital at the right time, in the right place - to realize the greatest return on investment Ensure enough inventories to meet the demand for production & sales, and to save funds, raise investment opportunities Reduce the inventories costs, wastes and risks to the stocks Apply just-in-time (JIT) b Debtors: Payment owed by customers (Accounts receivable) - - Offer minimum credit to customers Avoid risks of bad debts Payment due to suppliers (Accounts payable) Negotiate the generous credit terms with suppliers (lower price, high discount, long term of repayment…) Achieve the balance between getting and giving good credit terms to attract customers, keep good relation with suppliers, minimize cash outlay How should the CFO/ a company manage the working capital? Manage procurement and inventory Pay vendors on time Improve the receivables process Manage debtors effectively Make informed financing decisions - UNIT 19 What is the difference between selling and marketing concept (classical marketing and modern marketing)? Classical marketing Modern marketing Focuses on selling: The producers make products and then try to persuade customers to buy the available ones  Selling takes place after the production Focuses on satisfying customers’ needs and wants Producers provide the things that best fill customers’ demand  Marketing is performed before production and throughout the company’s operation What are 4Ps in marketing mix? What are included in each element of marketing mix?  Marketing mix is all the various elements of a marketing program, their integration, and the amount of effort that a company can expend on them in order to influence the target market The best-known classification of these elements is the 4Ps a Products: What customers need & want? Include quality, features (standard and optional), style, brand name, size, packaging, services and guarantee b Price: How much customers are willing to pay for the goods? Includes the basic list price, discounts, the length of the payment period, possible credit terms, and so on c Place: Where and when goods must be available for sales? Includes such factors as distribution channels, locations of points of sale, transport, inventory size, etc d Promotion: How to create rising demand for the items? Promotion groups together advertising, publicity, sales promotion and personal selling 4Ps are flexible and interrelated   Customers’ satisfaction Company’s profitability UNIT 20 a b - What are prices? Their roles / importance? Concept: Prices are measure of goods/ service value in terms of money Roles: Determine consumer choice, guide customers to maximize their utility Assist producers to choose profitable investments, determine company profitability & market share Facilitate trade, goods and money circulate etc - What are the common mistakes in setting prices? - How to handle pricing well? Pricing is too cost oriented Price is set independently of the rest of the marketing mix Price is not revised often enough to capitalize on market changes Price is not varied enough for different product items and market segments Pricing is not too cost oriented Price is not set independently of the rest of the marketing mix Price is revised often enough to capitalize on market changes Price is varied enough for different product items and market segments How are product prices set in different types of companies? - In small companies: Prices are often set by top management rather than by the marketing or sales department - In large companies: pricing is typically handled by divisional and product-line managers Even here, top management sets the general pricing objectives and policies and often approves the prices proposed by lower levels of management UNIT 21 What is accounting? What are the tasks of accountants? - Accounting provides financial information about an economic entity over a period of time Accounting refers to the design, maintenance and interpretation of the information in the accounts book - The tasks of accountants are: + Prepares asset, liability, and capital account entries by compiling and analyzing account information + Documents financial transactions by entering account information + Recommends financial actions by analyzing accounting options What are types of accounting information? Their purposes? - Financial accounting: + Describe detailed financial picture of the business, provide information about financial resources, obligation and activities of the entity + Used for different purposes: assisting investors and creditors in deciding where to place investment resources, reporting on company condition to managers, making tax return… so it is called general-purpose accounting - Management accounting: + Develop and interpret accounting information to assist the internal control system and managers in running the business, setting the company overall goals, evaluating its performance and making all management decisions + Used by management, decision-makers - Tax accounting: + Adjust and reorganize accounting information to conform with income tax reporting requirement + Used to design tax returns and tax planning What is financial accounting information? For what purpose is it used? Financial accounting refers to information describing the financial resources, obligations, and activities of an economic entity (either an organization or an individual)  Purpose: is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources What is management accounting information? For what purpose is it used? Management accounting involves the development and interpretation of accounting information intended specifically  Purposes: to assist management in running the business What are differences between financial accounting and management accounting? Financial accounting Management accounting + Describe detailed financial picture of the business, provide information about financial resources, obligation and activities of the entity + Develop and interpret accounting information to assist the internal control system and managers in running the business, setting the company overall goals, evaluating its performance and making all management decisions + Used for different purposes: assisting investors and creditors in deciding where to place investment resources, reporting on company condition to managers, making tax return… so it is called general-purpose accounting + Used by managers and in income tax + Used by management, decisionmakers returns UNIT 22 - - What are important financial statements? What information they provide? The balance sheet (based on accounting equation: Assets = Liabilities + Owners’ Equity) shows a company’s financial situation on a particular date, generally the last day of the financial year or accounting period The income statement (the profit and loss statement) shows earnings and expenditure, gives figures for total turnover and costs… The statement of cash flows (the source and application of funds statements/ the statement of changes in financial position) shows the flows of cash in and out of the business (cash inflows and outflows) between balance sheet dates UNIT 25 1.What is financial analysis? For what purposes are its results used internally and externally? Financial analysis is the selection, evaluation, and interpretation of financial data, along with other pertinent information, to assist in investment and financial decision-making - Financial analysis may be used internally to evaluate issues such as employee performance, the efficiency of operations, and credit policies, and externally to evaluate potential investments and the credit-worthiness of borrowers, among other things What are the sources of data available for financial analysis? sources: financial statement data, economic data, market data, current events - Financial statement data: + Include: profit & loss, efficiency/risks… + Come from: financial statements, other disclosures… - Market data: + Include: stock prices, price indexes… + Come from: financial press, daily electronic media… Economic data: + Include: GDP & CPI, consumption, production… + Come from: Government sources, private sources… - Current events: + Include: Co expansion, restructuring… + Come from: Reports, mass media… - What are financial ratios? How are they classified by construction? A financial ratio is a comparison between one bit of financial information and another They are classified as a coverage ratio, a return ratio, a turnover ratio, a component percentage - A coverage ratio is a measure of a company’s ability to satisfy (meet) particular obligations - A return ratio is a measure of the net benefit, relative to the resources expended - A turnover ratio is a measure of the gross benefit, relative to the resources expended - A component percentage is the ratio of a component of an item to the item What are aspects of the company operation can we evaluate from financial ratios? There are aspects of operating performance and financial condition we can evaluate from financial ratios: - A liquidity ratio: provides information on a company’s ability to meet its shortterm, immediate obligations - A profitability ratio: provides information on the amount of income from each dollar of sales - An activity ratio: relates information on a company’s ability to manage its resources (that is, its assets) efficiently - A financial leverage ratio: provides information on the degree of a company’s fixed financing obligations and its ability to satisfy these financing obligations - A shareholder ratio: describes the company’s financial condition in terms of amounts per share of stock - A return on investment ratio: provides information on the amount of profit, relative to the assets employed to produce that profit How are financial ratios classified? Financial ratios are classified according to construction and important aspects of company operation By construction, ratios can be classified as a coverage ratio, a return ratio, a turnover ratio, or a component percentage The important aspects of company operation include a liquidity ratio, a profitability ratio, an activity ratio, a financial leverage ratio, a shareholder ratio, a return on investment ratio UNIT 26 1.What are the tasks of auditors? Auditing is review and examination of accounting records and financial statements to ensure that they are true and reliable - The auditors: + Review and evaluate financial records and statements Ensure their accuracy, reliability + Correct errors and irregularities + Provide accounting control against errors + Suggest division of accounting duties to reduce possibility of misappropriation 2.What is internal auditing? What are advantages and disadvantages (strength and weakness) of internal auditing? Internal auditing is regular examinations of accounting documents and financial statements by the company’s own accountants - Advantages: The work plays an important role in the company’s internal control and financial management, limits accounting errors, loss of funds - Disadvantages: + The audit results may be inaccurate because of the internal auditor’s lack of qualification + The audit reports may not be shown to the right managing staff for necessary adjustment and solution, so reducing audit effectiveness UNIT 27 1.What factors would contribute to efficient production in some certain countries? Factors leading to efficient production in some certain countries include: - Climate - Natural resources - Geographical location - Working population - Technological development - Economic administration Mechanism & policies  Effective production of certain goods: Low costs, high productivity, high output, good quality 2.What countries benefit from the world trade? Its disadvantages? - Advantages of world trade: + Increase producers’ supply of goods and profits, improve competitiveness + Enable consumers to benefit from wider choices, higher quality and lower prices + Assist countries to exploit comparative advantages, create wealth, push up economic growth + Raise opportunities for market expansion and specialization + Promote the world’s economic efficiency - Disadvantages of world trade: + Language barriers + Cultural differences 3.Why/How the Gov encourage exports and restrict imports? * Why: - Encourage exports: + Reach the balance of trade, expand markets + Gain benefit from trade surplus, raise national wealth and Gov budget revenue - Limit imports: + Support & protect infant or important domestic industries from foreign competition + Avoid unemployment in important industries, maintain national basic skills + Ensure national security and independence *How: Gov control methods - Export encouragement: + Offer subsidies to producers & exporters + Set tax incentives, low export duty + Organize trade promotion missions + Provide marketing information + Sign common trade expansion agreements + Apply for preferential trade clauses + Join international trade organizations and treaties: ASEAN, AFTA, APEC, WTO, … - Import restriction or protectionism + Tariff barriers: import duties (specific or ad valorem) + Non-tariff barriers: Complicated procedures, cultural and social difference, legal and political difference, foreign exchange control, embargo policy, subsidies, quotas UNIT 29 1.What are common trade barriers? The reasons for imposing them? - Tariff on imports: Tarif is a tax imposed on imported goods and services + Raise Gov Budget revenue + Increase price of imports, limit imports & luxury consumption + Improve competitiveness of domestic products, support national industry - Quotas on imports: A quota is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period + Restrict imports and their supply + Raise imported goods price + Ensure the balance of trade - Subsidies: Subsidies are economic benefits or financial aid which are provided by the Gov to support certain national economic branches + Protect domestic industries and support the national citizens to afford important goods + Make imports less competitive than domestic products - Embargoes: Embargo is a form of punishment to prohibit the imports or exports with another country + Weaken the economic state of the targeted country + Put economic and political pressure on other countries 2.What are the benefits of developing multinational corporations? Multinational corporation is a company that designs, produces and markets products in many countries *The advantages of development of multinational firms include: - For the firm: + Expand business opportunities, production and market scales + Exploit comparative advantages to improve production efficiency + Develop global philosophy of management, marketing and production - For the local country: + Promote technology transfer, new skill training, investments and job creation + Raise the local residents’ living standard and working skills ... reorganize accounting information to conform with income tax reporting requirement + Used to design tax returns and tax planning What is financial accounting information? For what purpose is it... UNIT 21 What is accounting? What are the tasks of accountants? - Accounting provides financial information about an economic entity over a period of time Accounting refers to the design, maintenance... and adjustments for business improvements Objectives: Minimize the costs wastage and misuse of finance, the risks of investments Maximize the financial efficiency, the return on finance and profitability