Text 1. Financial management

The role of finance in business is huge. Financial managers use data obtained from accountants and recommend to the top management how to improve the financial strength of a firm. They plan budgets, control the funds, obtain and collect the funds, manage taxes and take up audit matters. A true manager must understand accounting, the same as a good accountant has to be aware of finance.

Finance is the function in business responsible for getting funds for a firm, managing funds within a firm and planning possible expenditures of funds on various assets. A person who obtains, plans and controls money effectively is known as a vice president of finance or treasurer. One may observe financial management as a logical structure involving corporate goals, financial plan, obtaining funds, managing these funds, spending the funds and managing taxes.

Even if the work performed by financial managers is perfect, different financial problems might appear. The most common are: poor cash flow, undercapitalisation (when one has not enough money to start-up) and inadequate expense control. How to obtain the funds to solve these problems? We may speak about long-term and short-term financing as the ways to consider a difficult financial situation in a firm.

Long-term loan is money acquired from the owners of the firm or lenders not expecting this money being repaid within the period of 2 or more years. The money is usually used to finance larger expenses such as buying equipment or long-term assets or just expanding of an organisation.

When an enterprise is starting its business, its hard to recover enough money to keep the track. Sometimes, additional funds are required. Then a company may obtain capital that involves the public sale of stock that is referred to as equity financing.

Stocks are shares of ownership of a company. A stock certificate proves stock ownership. It lists the name of the company, the number of shares it represents and the type of stock it is. A dividend is a part of the firm’s profits that goes to stockholders. Proxy is a temporary transfer of voting rights from stockholders to managers. Growth stocks are stocks of corporations whose earnings have increased in comparison to the economy and are expected to grow in the future. Such companies spend less money on dividends and use it for financing their further growth. Common stock includes voting rights and dividends and represents ownership privileges in a firm. Preferred stock gives owners preference in payment of dividends and an earlier claim on assets if the business is sold but it does not provide voting rights.

Businesses often have some smaller expenses such as unexpected bills, for instance or cash necessary to cover day-to-day spending. So, business needs short-term funds when other funds run out. Short-term loans are those necessary to be repaid in less than a year.

One should know how to obtain and manage the funds one needs to start up and get along with the business efficiently. Perfect financial management begins with planning. Financial planning stands for short-run and long-run money flows to and from a firm. Its objective is to optimise profits and guarantee the best use of money.

People in business may earn money in different ways, either producing and selling goods and services or investing into other ventures. Security markets enable businesses and investors to buy and sell stocks, bonds and mutual funds. Stock exchanges let their members buy and sell securities to the public. A middleman who buys and sells securities for the clients is called a stockbroker.

The principle of successful business is very simple: one has to be aware of how to accumulate capital, invest it to get as much income as one can and to earn more than one spends. To build one’s capital account, it’s advisable one should make the list of “WHAT TO DO NEXTs”. There are people who assist families in developing a compre­hensive program involving insurance, investments, taxes etc., called financial planners. Those involved in business should consider the problem of insurance coverage protecting life, health and a firm from the possible accidents, failures and losses. They should meditate over the best way of investing money to promote a venture, reduce taxes as much as possible and use help from professionals to cope with difficulties.

Task 25. Translate the sentences into English:

1. Фінансування – це одна із найважливіших функцій бізнесу, яка передбачає планування фінансів і можливих витрат. 2. Найчастіше проблеми з фінансуванням виникають у малому бізнесі. 3. Довгострокові позики надають на період, більший від двох років. 4. Акційний сертифікат засвідчує наявність акцій у власника. 5. Дивіденди – це частина доходу фірми, яка переходить у власність акціонера. 6. Привілейовані акції дають власнику першочергове право на виплату дивідендів та майно компанії у разі продажу бізнесу. 7. Комерційні банки надають різні види позик. 8. Фондові біржі дають можливість інвесторам купувати та продавати цінні папери. 9. Інвестиція – це вклад капіталу для одержання доходу. 10. Диверсифікація передбачає накопичення засобів для інвестицій під час процедури інвестування і спрямована на зменшення ризику. 11. До боргових зобов’язань відносять облігації і довгострокові позики банкам та інши­м фінансовим установам. 12. Критеріями для вибору способу інвестування є інвести­ційний ризик, дохід, тривалість, ліквідність та оподаткування. 13. Проблемою, з якою може зіткнутися менеджер з фінансування, є неадекватний контроль витрат. 14. Довгострокові позики використовують для закупівлі обладнання. 15. Фінансування вважають однією з основних функцій бізнесу, що передбачає накопичення і управління грошовими активами фірми.

Task 26. Make up a plan of the text “FINANCIAL MANAGEMENT” in writing.