UNIT 3
1. Introduc Introducing ing key terms terms in financ financial ial planni planning: ng:
Complete the sentences below with a word from the box.
1. Profitability shows shows how a busine business ss might might make make profit profits. s. It is calcul calculated ated from the relationship between profit and the capital invested in the company, and between profit and turnover. 2. The net profit margin of a business is the total amount of sales, before the costs are deducted. . The core activity of a business is the main product or service which the business provides, e.g. for !I"T !I"T it is cars. #. The setting-up costs is the profit the business makes makes before costs are considered. considered. $. Te gross-profit margin are the costs involved in creating a new business. %. The overeads are the normal costs of a business, which do not change if production rises. They are also referred to as indirect costs of fixed costs. &. The break-even point is a calculation of profit after deducting the costs of sales and overheads. '. The cost of sales are all costs directly associated with producing the products. (. The turmover is the amount of sales a company needs to cover all costs. 1). 1). The The selling costs are all costs directly concerned with getting customers to buy products and moving them to the customer.
!. "ommo "ommon n abbr abbrev evia iati tion onss *hat do the following abbreviations mean+ !ill in the missing letters.
1. "T 2. -C . td
#$%U& $''&' T$( PU)%I" %I*IT&' "+*P$N, %I*IT&'
1
#. / Co.
$N' "+*P$N,
$. C*0
"$ /IT +0'&0
%. c.i.f
"+T INU0$N"& and 20&IT
&. -"
P$, $ ,+U &$0N 3i.e. tax4
'. -/ account
P0+2IT $N' %+ $""+UNT
3. "asflo4 problems and oter difficulties: Choose the correct definition for each of the terms in italics.
1. casflo4
a. money from sales and money going out to meet costs bot fi5ed and variable b. cash available to pay debts c. payment for fixed costs, including salaries 2. to rescedule overdraft payments
a. stop paying overdraft credits to te bank b. set a new level of payments and5or change the fre6uency of payments to the bank c. ask the bank for a bigger loan . li6uidity problem a. not paying debts b. customers who are late in making payments
c. not enoug cas available to pay for costs #. li6uid assets 7 active licide8
a. 4ealt tat can easily be canged into cas b. property that cannot be easily changed into cash c. stocks and shares in drinks companies $. bad debts a. large bills to pay b. old invoices that the customer has not paid
c. customers 4o al4ays pay late %. go into li6uidation a. to have a lot of money, especially cash
b. to go bankrupt and to stop trading 2
c. to be taken over by another company &. to record a credit deficit a. to have no profits b. to be refused credit by a supplier c. to make a loss '. debit balance a. the same as a credit deficit
b. debits and credits are e6ual c. the number of debits is the same as the company forecast (. capacity problem a. workers are not able to meet production needs
b. te company is already producing te ma5imum 6uantity possible but tere is demand for more c. costs are at the maximum level the company can afford and bank will not lend any more money 1). opportunity cost a. the costs associated with doing new business b. the costs of not doing something
c. te costs of researc and development 9. 2inancial control
7usinesses have to work out the most efficient way to produce products and services at a profit. The test introduces some key terms for this aspect of managing company finances. 8atch the term on the left to the correct definition on the right. 1. profitability
a. the amount of products or services a company needs to sell to cover all its costs
2. return on investment390I4
b. ratio of total debts to total assets
. li6uidity
c. measure of profitability obtained from dividing net income by total amount invested
#. leverage3..parghie4
d. ratio of total sales to total costs of inventory 3goods in storage4
$. break:even point 37-4 %. efficiency
1e
2c
e. ratio of cost to benefit f. measure of how well a business can meet its short term cash needs
f
#d
$b
%a
. *anagement abbreviations
*hat do the following abbreviations stand for; 1. <8 = small and medium enterprises ==================== 2.7C> ================================================================= . 870== management by ob;ectives ============= #.87*" management by ordering around $.T?8= total<<6uality<
11. C"8 "omputer-aided manufacturing 12. A<<==================================================================== 1. B9=== uman
;ust
=. )usiness verbs
!or each of the verbs below, three of the four words or expressions fit. In each case, circle the one that does not fit.
1. A0
2. 8"E
a. business
b. a profit
c. a Dob
d. a deal
a. money
b. business #
c. a loss
. T"E
#. B"
$. 8T
%. "@GCB
&. C@T
'. C"99 0@T
(. "CBI
1). 9"CB
d. a decision
a. a long time
b. a decision
c. appropriate measures
d. a deadline
a. progress
b. something to eat
c. shares in a company
d. a meeting
a. a deadline
b. customersF expectations
c. an appointment
d. a target
a. a product
b. a ship
c. a campaign
d. a target
a. costs
b. Dobs
c. a decision
d. a price
a. a meeting
b. duties
c. research
d. market survey
a. progress
b. a breakthrough
c. a Dob
d. little
a. a decision
b. a strategy
c. an agreement
d. a target
>. ,our pay
8atch each form of payment with the right person; 1. grant
a. author
2. salary
b. senior manager
. wage
c. laid:off employee
#. commission
d. government
$. fees
e. blue:collar worker
%. dividend
f. retired employee
&. royalty
g. sales representative
'. stock option
h. student
(. pension
i. consultant
1). tax
D. shareholder
11. redundancy pay
k. white:collar worker
$
1
2
#
$
%
&
'
(
1)
11
?. Price-demand relationsip
!ind words or phrases in the text which mean more or less the same as the phrases given;
Te "ro4n slips @ U truck giant drops top seller !A "uto, the largest independent truck manufacturer in the @<", yesterday announced plans to end production of its biggest:selling truck, the Crown $))). 0ver half a million Crown trucks have been sold in 2) years, but sales in the past five years have declined to (,))) last year. Three years ago the company cut prices by 2)H to try to stimulate demands but sales rose by less than $H. The price cut ate up the entire margin. ven in the normally price:sensitive @< truck market, the Crown could not recover. ItFs a sad day, but we have to face reality. The Crown has passed its sell:by:date,F said aurie
1. consumers wanting to buy the product 2. difference between cost price and selling price . easily influenced by price changes #. is old:fashioned $. reduction in price %. not affected by price changes
%
&. sales in a year '. total sales
A. Placing an order: covering letter
ead +ffice
Gesson Bouse Gewell
Aear
-eter Crane &
Chief 7uyer
nc. 0rder Go.A9#1%
'
