Financial English 2011 01

919 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
919
On SlideShare
0
From Embeds
0
Number of Embeds
92
Actions
Shares
0
Downloads
35
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Financial English 2011 01

  1. 1. Financial English<br />Stephan Langdon, MBA, M. Ed.<br />
  2. 2. Accounting<br />
  3. 3. Audio One<br />Balance Sheet<br />Asset (tangible, intangible)<br />Liability<br />liable<br />Make a Loss, Take a loss<br />Profit and loss statement<br />Financial statements<br />Video Vocab<br />
  4. 4. GAAP<br />calculate<br />Cash flow<br />Operating, non operating<br />Video Vocab 2<br />
  5. 5. Put correct words in blanks: accounts data-entry errors. expense account keeping track likelihood record-keeping transaction transfer owe<br />Double-entry accounting is a method of _____ that lets you track just where your money comes from and where it goes. <br />Using double-entry means that money is never gained nor lost---it is always _____ from somewhere (a source account) to somewhere else (a destination account). This transfer is known as a _____, and each transaction requires at least two _____. <br />An account in GnuCash is a record for _____ of what you own, _____, spend or receive. For example, if you pay a phone bill with a check, money transfers from checking to the phone company. This is a transaction transferring money from a checking account to a phone _____. You probably already think of your checking account as a bank "account," but your expenses (such as phone bill) are also "accounts". <br />This double-entry concept has been around since the 13th century, and its purpose has always been to reduce the _____ of _____. <br />
  6. 6. Double-entry accounting is a method of record-keeping that lets you track just where your money comes from and where it goes. <br />Using double-entry means that money is never gained nor lost---it is always transferred from somewhere (a source account) to somewhere else (a destination account). This transfer is known as a transaction, and each transaction requires at least two accounts. <br />An account in GnuCash is a record for keeping track of what you own, owe, spend or receive. For example, if you pay a phone bill with a check, money transfers from checking to the phone company. In GnuCash, this is a transaction transferring money from a checking account to a phone expense account. You probably already think of your checking account as a bank "account," but your expenses (such as phone bill) are also "accounts". <br />This double-entry concept has been around since the 13th century, and its purpose has always been to reduce the likelihood of data-entry errors. <br />
  7. 7. Accounting Cycle<br />
  8. 8. Accounting Cycle<br />
  9. 9. Accounting Cycle<br />
  10. 10. Accounting Cycle Video Accounting Equation<br />What is assumed? <br />What is ALO<br />What are the types of Assets<br />What must the sides be? <br />Video<br />
  11. 11. Finance and Accounts <br />
  12. 12. Finance and Accounts<br />
  13. 13. Key Terms<br />
  14. 14. Costs<br />
  15. 15. Costs<br />
  16. 16. Revenue<br />Total Revenue – also known as turnover, sales revenue or ‘sales’ = Price x Quantity Sold<br />TR = P x Q<br />Price – may be a variety of different prices for different products in the portfolio<br />Quantity – could be global sales<br />
  17. 17. Profit<br />Profit (Π) = TR – TC<br />Normal Profit – the minimum amount required to keep a business in a particular line of production<br />Abnormal/Supernormal Profit – the amount over and above the amount needed to keep a business in its current line of production<br />
  18. 18. Break Even<br />
  19. 19. Break Even<br />Occurs where Total Costs = Total Revenue<br />Start-up costs – fixed costs<br />Running costs – variable costs<br />Revenue stream depends on price charged<br />‘Low’ price – need to sell more to break-even<br />‘High’ price – lower level of sales required before breaking even<br />Fixed Costs<br />Break-Even Point = ---------------<br /> Contribution<br />
  20. 20. Purpose of Accounts<br />
  21. 21. Profit and Loss Account - Flow<br />
  22. 22. Profit and Loss Account<br />Shows the flow of sales and costs over a period<br />Shows the level of profit or loss made<br />Shows what has been done with the profit or loss<br />
  23. 23. Profit and Loss Account<br />Consolidated Profit & Loss Account for the year ended<br />2003<br />2002<br />2001<br />Weeks<br />52<br />52<br />52<br />Currency<br />£ million<br />£ million<br />£ million<br />Turnover<br />7688.0<br />8340.0<br />9278.0<br />Cost of sales<br />-7263.0<br />-8291.0<br />-8757.0<br />Gross Profit<br />425.0<br />49.0<br />521.0<br />Operating Expenses<br />-130.0<br />-137.0<br />-77.0<br />Operating Profit<br />295.0<br />-88.0<br />444.0<br />Other costs/income<br />95.0<br />166.0<br />-68.0<br />Profit before interest and taxation<br />390.0<br />78.0<br />376.0<br />Net interest receivable (payable)<br />-255.0<br />-278.0<br />-226.0<br />Profit on ordinary activities before taxation<br />135.0<br />-200.0<br />150.0<br />Tax on profit on ordinary activities<br />-50.0<br />-71.0<br />-69.0<br />Profit on ordinary activities after taxation<br />85.0<br />-129.0<br />81.0<br />Equity minority interests<br />-13.0<br />-13.0<br />-14.0<br />Profit for the financial period<br />72.0<br />-142.0<br />67.0<br />Dividends<br />0.0<br />-193.0<br />Retained profit<br />72.0<br />-142.0<br />-126.0<br />Dividend – the share of the profit returned to shareholders<br />Retained Profit – the amount kept back for future investment, etc.<br />Profit and Loss Account for British Airways plc<br />Source: http://www.bized.ac.uk/cgi-bin/ratios/ratiodata.pl<br />Turnover – the revenue earned over the year<br />Operating or Net Profit = Gross profit – operating costs<br />Subtract other costs and expenses incurred to get profit before tax<br />Final section called ‘appropriation account’ – shows where the profit/loss is going<br />Gross Profit = turnover – cost of sales<br />Operating Expenses – the fixed costs<br />
  24. 24. Balance Sheet - Snapshot<br />
  25. 25. Balance Sheet<br />A snapshot of the firm’s position at a point in time<br />Shows what a company owns (assets) and what it owes (liabilities)<br />Balance Sheet shows what assets a company has (use of funds) and where the money came from to acquire those assets (source of funds)<br />
  26. 26. Balance Sheet – Part 1<br />Consolidated Balance Sheet for the year ended<br />2003<br />2002<br />2001<br />Weeks<br />52<br />52<br />52<br />Currency<br />£ million<br />£ million<br />£ million<br />Fixed assets<br />Intangible Assets<br />164.0<br />105.0<br />60.0<br />Tangible Assets<br />9487.0<br />10509.0<br />10662.0<br />Investments<br />524.0<br />489.0<br />426.0<br />Total Fixed Assets<br />10175.0<br />11103.0<br />11148.0<br />Current assets<br />Stock<br />87.0<br />109.0<br />170.0<br />Debtors due within one year<br />986.0<br />1231.0<br />1444.0<br />Short-term investments<br />1430.0<br />1155.0<br />865.0<br />Cash at bank and in hand<br />222.0<br />64.0<br />71.0<br />Total Current Assets<br />2725.0<br />2559.0<br />2550.0<br />Fixed Assets – assets not used up in production or lasting longer than one year – equipment, buildings, machinery, etc.<br />Fixed assets can be tangible – i.e. physical items or intangible – i.e. brand name, goodwill.<br />Current Assets: assets that are used up during production and which are likely to yield cash in the coming year – for example, stock will be sold and debtors owing the business money will pay up!<br />
  27. 27. Balance Sheet – Part 2<br />Creditors: Amounts falling due within one year<br />-2904.0<br />-3201.0<br />-3308.0<br />Net Current Assets (liabilities)<br />-179.0<br />-642.0<br />-758.0<br />Total assets less current liabilities<br />9996.0<br />10461.0<br />10390.0<br />Creditors: Amounts falling due after more than one year<br />-6553.0<br />-7097.0<br />-6901.0<br />Provisions for liabilities and charges<br />-1169.0<br />-1157.0<br />-1164.0<br />Net assets<br />2274.0<br />2207.0<br />2325.0<br />Capital and reserves<br />Called-up share capital<br />271.0<br />271.0<br />271.0<br />Share premium<br />788.0<br />788.0<br />788.0<br />Other reserves<br />270.0<br />270.0<br />290.0<br />Profit and loss account<br />729.0<br />687.0<br />772.0<br />Equit shareholders' funds<br />2058.0<br />2016.0<br />2121.0<br />Minority interests<br />216.0<br />191.0<br />204.0<br />Total capital employed<br />2274.0<br />2207.0<br />2325.0<br />It can cefrom share capital and from retained profit (profit and loss account)<br />The total capital employed must be the same as the sum of the net assets – hence the term ‘balance’ sheet!<br />And to those who are longer term creditors – loans, mortgage on property etc<br />This leaves us with ‘Net Assets’<br />
  28. 28. Balance Sheet<br />A guide to the structure of the assets of a company<br />A guide to the level of gearing – the ratio of loan to share capital<br />Gives a guide as to the degree of working capital – the amount the company has to be able to pay its everyday debts (current assets – current liabilities)<br />Shows the total value of a firm at that moment in time<br />
  29. 29. Writing<br />Fragments<br />
  30. 30. Fragments<br />Rule #1: Fragments are illegal<br />Rule #2: Some place need <br />Rule #3: In case of discrepancy, ignore Rule #1<br />05/09/08<br />
  31. 31. Fragments<br />Sentence—a complete unit of thought containing at least one independent clause that begins with a capital letter and ends with a period, question mark, or exclamation point<br />Independent Clause—a cluster of words containing a subject and a predicate or verb<br />Fragment—a set of words punctuated as a sentence, but lacking one or more of the elements usually considered necessary to a sentence <br />05/09/08<br />
  32. 32. There are two basic types<br />The word combination which is missing the subject, verb, or both<br />The dependent clause which cannot “stand” alone<br />The dependent clause is alone, confused, and clinging to something—the independent clause.<br />Subject<br />Verb<br />
  33. 33. Type #1 Fragments<br />No-Subject Fragment<br />Example—Is tired of asking questions.<br />No-Verb Fragment<br />Example—My sister frequently working late at night.<br />No-Subject, No-Verb Fragment<br />Example—So kind of you.<br />05/09/08<br />
  34. 34. Type #2 Fragments<br />A dependent or subordinate clause does NOT make a complete statement and cannot “stand” alone. There are basically three types of dependent clauses—adverb, adjective, and noun.<br />05/09/08<br />
  35. 35. Type #2 Fragments<br />Adverb Dependent Clause—serves the function of an adverb, begins with a subordinating conjunction [after, although, as, as if, as long as, as soon as, as though, because, now, if, in order that, provided (that), since, so (that), than, though, till, unless, until, when, whenever, where, wherever, while]<br />Example of an Adverb Dependent Clause: When he is here, I feel comfortable.<br />Example of an Adverb-Clause Fragment: Since they are going.<br />05/09/08<br />
  36. 36. Type #2 Fragments (cont.)<br />Adjective Dependent Clause—serves the function of an adjective, begins with a relative pronoun (who, whoever, whom, whomever, whose, that, what, which)<br />Example of an Adjective Dependent Clause: This is the house that I want to buy.<br />Example of an Adjective-Clause Fragment: Which I cannot buy.<br />05/09/08<br />
  37. 37. Type #2 Fragments (cont.)<br />Noun Dependent Clause—serves the function of a noun<br />Example of a Noun Dependent Clause: That I want to go is a secret.<br />Example of a Noun-Clause Fragment: Whomever I see.<br />05/09/08<br />
  38. 38. Type #2 Fragments (cont.)<br />Remember that a dependent clause has a subject and a verb but that the dependent clause cannot “stand” alone.<br />Seemingly, most fragments in college papers are of the dependent-clause type.<br />05/09/08<br />
  39. 39. Determining Fragments<br />When determining whether a group of words is a sentence or a fragment, ask the following questions:<br />Is there a subject?<br />Is there a complete verb?<br />Is there an independent clause?<br />If any answer is NO, then the group of words is a fragment.<br />If all answers are YES, then the group of words is a sentence.<br />05/09/08<br />
  40. 40. Business Letter<br />
  41. 41. 6 characteristics that all business letters share:<br />Starting Point: reason for contact<br />Purpose: discuss, announce, clarify, confirm<br />Form: semi-block or block, memo etc…<br />Audience: who are you speaking to?<br />Voice: direct and sincere<br />Point of View: person to person (I) general or group discussion (he she they)<br />
  42. 42. Form of the Business Letter<br />A letter must be professional and look professional.<br />The two formats for writing business letters are the following:<br />Semi-Block<br />Full Block<br />Additional items to keep in mind when setting up your letter:<br /><ul><li>Use margins left and right, top and bottom, from 1 to 1.5inches.
  43. 43. Center the letter vertically, from top to bottom.</li></li></ul><li>The 7 parts of a business letter<br />Heading<br />Inside address<br />Salutation <br />Body<br />Complimentary closing<br />Signature<br />Enclosure: when needed<br />
  44. 44. The Heading<br /><ul><li>The heading gives the writer’s complete address with the date of application.
  45. 45. This would be your address!</li></li></ul><li>The Inside Address<br /><ul><li>Gives the reader’s name and address.
  46. 46. If you’re not sure who to address or how to spell a person’s name, you could call the company for the information.
  47. 47. If the person’s title is a single word, place it after the name and a comma. A longer title goes on a separate line.</li></li></ul><li>The Salutation<br /><ul><li>Begins with Dear and ends with a colon, NOT a comma!
  48. 48. Do not guess to whom you should address your letter to!
  49. 49. Use Mr. or MS. Plus the person’s last name, unless you are well acquainted.
  50. 50. If you can’t get the person’s name, replace the salutation with Dear or Attention: or an appropriate title for the reader: Sales Manager, To Whom it May Concern:etc…NEVER use Dear Sir or Gentlemen.</li></li></ul><li>The Body<br /><ul><li> The body should consist of single-spaced paragraphs with double-spacing between paragraphs.
  51. 51. DO NOT INDENT THE PARAGRAPHS!</li></li></ul><li>Complimentary Closing<br /><ul><li> For the closing use Sincerely, Yours truly, Thank you…followed by a comma.
  52. 52. Capitalize only the first word.</li></li></ul><li>Signature<br /><ul><li>The signature includes the writer’s handwritten name plus the typed name.
  53. 53. If a document (brochure, form, copy, etc..) is enclosed with the letter, the word Enclosure or Encl. appears below the initials.
  54. 54. If you send more than one copy of the letter out, type the letters cc: plus the person’s or department’s name beneath the enclosure line.</li></li></ul><li>Spacing within a letter<br /><ul><li>After the Heading: 4 spaces
  55. 55. After the Inside Add.: 2 spaces
  56. 56. After the Salutation: 2 spaces
  57. 57. Between the paragraphs: 1 spaceEXCEPT for the final paragraph where you skip 2 spaces (before closing)
  58. 58. After Closing (between closing and sign.) skip 4 spaces.</li>

×