Financial Planing

Unit 4

Financial planning (like all planning) begins with the establishment of goals and objectives. Next, planners must assign costs to these goals and objectives. That is, they must determine how much money is needed to accomplish each one. Finally, financial planners must identify available sources of financing and decide which to use. In the process, they must make sure that financing needs are realistic and that sufficient funding is available to meet those needs.

THREE STEPS OF FINANCIAL PLANNING

1. Establishing Organizational Goals and Objectives. Establishing goals and objectives is an important management task. A goal is an end state that the organization wants to achieve. Objectives are specific statements detailing what the organization intends to accomplish within a certain period of time. If goals and objectives are not specific and measurable, they cannot be translated into costs, and financial planning cannot proceed. They must also be realistic. Otherwise, it may be impossible to finance or achieve them.

2. Budgeting for Financial Needs. A budget is a financial statement thatprojects income and/or expenditures over a specified future period of time.
Once planners know what the firm's goals and objectives are for a specificperiod of time - say, the next calendar year-they can estimate the variouscosts the firm will incur and the revenues it will receive. By combiningthese items into a companywide budget, financial planners can determinewhether they must seek additional funding from sources outside the firm.
Usually the budgeting process begins with the construction of individualbudgets for sales and for each of the various types of expenses:production, human resources, promotion, administration, and so on.
Budgeting accuracy is improved when budgets are first constructed forindividual departments and for shorter periods of time. These budgets caneasily be combined into a com-panywide cash budget. In addition, departmental budgets can help managers monitor and evaluate financial performance throughout the period covered by the overall cash budget.

Most firms today use one of two approaches to budgeting. In the traditional approach, each new budget is based on the dollar amounts contained in the budget for the preceding year. These amounts are modified to reflect any revised goals, and managers must justify only new expenditures. The problem with this approach is that it leaves room for the manipulation of budget items to protect the (sometimes selfish) interests of the budgeter or his or her department.

This problem is essentially eliminated through zero-base budgeting .

Zero-base budgeting is a budgeting approach in which every expense mustbe justified in every budget. It can dramatically reduce unnecessaryspending. However, some managers feel that zero-base budgeting requires toomuch time-consuming paperwork.
3. Identifying Sources of Funds. The four primary sources of funds aresales revenue, equity capital, debt capital, and the sale of assets. Futuresales generally provide the greatest part of a firm's financing.

Sales revenue is the first type of funding.
The second type of funding is equity capital, which is money receivedfrom the sale of shares of ownership in the business. Equity capital isused almost exclusively for long-term financing. Thus it might be used tostart a business and to fund expansions or mergers. It would not beconsidered for short-term financing needs.
The third type of funding is debt capital, which is money obtainedthrough loans. Debt capital may be borrowed for either short-or long-termuse.
The fourth type of funding is the sale of assets. A firm generallyacquires assets because it needs them for its business operations.
Therefore, selling assets is a drastic step. However, it may
be a reasonable last resort when neither equity capital nor debt capital can be found. Assets may also be sold when they are no longer needed.

MONITORING AND EVALUATING FINANCIAL PERFORMANCE

It is important to ensure that financial plans are being implemented and to catch minor problems before they become major problems.

Accordingly, the financial manager should establish a means of monitoring and evaluating financial performance. Interim budgets

(weekly, monthly, or quarterly) may be prepared for comparison purposes.

These comparisons point up areas that require additional or revised planning.

Exercises

I. Translate into Russian.
Basis of financial management; goal; objective; sources of fi

nancing; funding; step; important task; financial performance;

budgeting; expenditure; revenue ; sales revenue; equity capital;

debt capital; specific period; profit; assets; short-term borrowing;

long-term borrowing; merger; companywide budget; cash budget;

zero-base budgeting; income; source; share of ownership; assign

a cost; justify; meet needs; obtain; implement; modify; establish;

reduce; determine; evaluate. !:

II. Find the English equivalents.
Фінансовий план; бюджет; складання бюджету; готівковий бюджет; бюджетвсієї компанії; проміжний бюджет; дохід (річний); дохід; дохід відпродажів; позиковий капітал, про роботу фірми; активи; бюджетна стаття; витрата;джерело грошових коштів; частка власності; акціонерний капітал;засіб; останнє рятівний засіб; радикальний крок; фінансовадіяльність; визначати вартість; вирішувати; оцінювати; виправдовувати;здійснювати; задовольняти потреби; нести витрати; фінансувати;позичати (брати в борг).

III. Fill in the blanks.
1. Financial planning begins with the establishment of ... and

2. A budget is a financial statement that projects ... and/or ... over a specified future period of time.
3. Usually the budgeting process begins with the construction of individual budgets for each of the various types of ... .
4. Budgeting accuracy is improved when budgets are first constructed for individual ... for shorter periods of time.
5. Departmental budgets can help managers .. . and financial performance throughout the period covered by the overall cash budget.

6. In the traditional approach, each new budget is based on the ... contained in the budget for the .. . year.
7. This approach leaves room for the manipulation of ... ... to protect the interests of separate departments.
8. Zero-base budgeting is a budgeting approach in which every ... must be justified in every budget.
9. ... ... are the first type of funding.
10. The second type of funding is ....... 11. The third type of funding is ....... 12. The fourth type of funding is the ... of .... 13. Selling assets is a ... ... .
14. The financial manager should establish a ... of monitoring and ... financial performance.

IV. Translate into English in a written form.
1. Фінансовий план-це план отримання та використання грошей, необхідних для здійснення цілей організації.
2. Фінансове планування починається з встановлення кінцевих цілей і поетапних цілей.
3. Бюджет передбачає дохід і витрати за конкретний період часу.
4. Процес складання бюджету (budgeting) починається зі складання окремих бюджетів з продажу та по кожному виду витрат.
5. Ці бюджети легко об'єднуються в готівковий бюджет усієї компанії.
6. Багато фірм використовують один з двох підходів до побудови бюджетів.
7. При традиційному підході новий бюджет грунтується на бюджеті за попередній рік і керівники обгрунтовують тільки нові витрати.
8. Це залишає місце для маніпуляції бюджетними статтями.
9. Ця проблема в основному ліквідується через зо

тирование нуля. -; • •;
10. Чотирма основними джерелами фінансування є: прибуток від продажів, акціонерний капітал, позиковий капітал і продаж активів.
11. Продаж активів - це останнє рятівний засіб.
12. Фінансовий керівник повинен забезпечити (establish) засіб контролю та оцінки фінансової діяльності.

V. Questions and assignments.
1. What is a plan?
2. What is a financial plan?
3. What does financial planning begin with?
4. State the difference between goals and objectives.
5. List the three steps involved in financial planning.
6. In what case financial planning cannot proceed?
7. State the meaning of the word "budget".
8. Give the examples of various types of expenses which must be considered

(враховані) in budgeting process?
9. How can budgeting accuracy be improved?
10. What is the peculiarity (особливість) of the traditional approach to budgeting?
11. What is the problem with this approach?
12. What is the difference between the traditional budgeting approach and zero-base budgeting?
13. What is the problem with zero-base budgeting?
14. List the four primary sources of funding.
15. For what purpose (мету) is equity capital used?
16. Is selling assets a normal step?
17. In what case selling assets may be a reasonable last resort?
18. For what purpose may interim budgets be prepared?

VI. Make up a written abstract (короткий виклад) of the text.

VII. Retell the prepared abstract.

Unit 5

Outside Sources of Financing

Financial management consist of all those activities that are concerned with obtaining money and using it effectively. Effective financial management involves careful planning. It begins with a determination of the firm's financial needs.

Money is needed to start a business. Then the income from sales could be used to finance the firm's continuing operations and to provide a profit.

But sales revenue does not generally flow evenly. Income and expenses mayvery from season to season or from year to year. Temporary financing may beneeded when expenses are high or income is low. Then, the need to purchasea new facility or expand an existing facility may require more money thanis available within a firm. In these cases the firm must look for outsidesources of financing. Usually it is short-or long-term financing.

1. Short-term financing is money that will be used for one year or lessand then repaid.
There are many short-term financing needs. Two deserve special attention.
First, certain necessary business practices may affect a firm's cashflowand create a need for short-term financing.
Cashflow is the movement of money into and out of an organization. Theideal is to have sufficient money coming into the firm, in any period, tocover the firm's expenses during that period. But the ideal is not alwaysachieved. For example, a firm that offers credit to its customers may findan imbalance in its cash flow. Such credit purchases are generally not paiduntil thirty or sixty days (or more) after the transaction. Short-termfinancing is then

needed to pay the firm's bills until customers have paid their bills.
Unanticipated expenses may also cause a cash-flow problem.

A second major need for short-term financing that is related to a firm's cash-flow problem is inventory.

Inventory requires considerable investment for most manufactures, wholesalers, and retailers. Moreover, most goods are manufactured four to nine months before they are sold to the ultimate customer. As a result, manufacturers often need short-term financing. The borrowed money is used to buy materials and supplies, to pay wages and rent, and to cover inventory costs until the goods are sold. Then, the money is repaid out of sales revenue. Additionally, wholesalers and retailers may need short-term financing to build up their inventories before peak selling periods.
Again, the money is repaid when the merchandise is sold.

2. Long-term financing is money that will be used for longer period than one year. Long-term financing is needed to start a new business. It is also needed for executing business expansions and mergers, for developing and marketing new products, and for replacing equipment that becomes obsolete or inefficient.

The amounts of long-term financing needed by large firms can be very great .

Exercises

I. Translate into Russian.
Income; profit; facility; sales revenue; expense; source; term; short -term financing; long-term financing; cash; cash flow; expand; provide;obtain; purchase; affect; be available; repay; borrow; transaction;supplies; marketing; equipment; merger; retailer; wholesaler; manufacturer;imbalance; merchandise; inventory; rent; sales revenue.

II. Find the English equivalents.
Фінансові потреби; орендна плата; вартість; виробник; оптовийторговець; роздрібний торговець; (торгова) угода; дохід від продажу; припаси;товари; злиття (підприємств); визначення; товарні запаси; обладнання;продаж; дохід; прибуток; витрата; термін; короткострокове фінансування;довгострокове фінансування; готівка; рух готівки;забезпечувати; змінюватися; купувати; бути в наявності; пропонувати; замінювати;впливати (на); кінцевий; застарілий; неефективний; непередбачений;ретельний.

III. Fill in the blanks.
1. Financial management begins with a determination of the firm's ... .
2. Temporary financing may be needed when ... are high and ... is low.
3. In these cases the firm must look for outside ... of financing.
4. Short-term financing is ... that will be used for one year or less and then .... 5. Cash flow is the movement of ... into and out of an organization.
6. A firm that offers credit to its customers may find an imbalance in its
... .
7. A second major need for ... financing that is related to a firm's cash-flow problem is ... .
8. The borrowed money is used to buy ... and ... , To pay ... and to cover
... until the goods are sold.

IV. Translate into English.
1. Фінансовий менеджмент складається з тих видів діяльності (activities), які відносяться до отримання грошей і ефективного їх використання.
2. Короткострокове фінансування - це гроші, які будуть використовуватися протягом одного року або менше (less).
3. Існують (there are) багато потреб короткострокового фінансування, але рух готівки та товарні запаси представляють (are) дві основні проблеми.
4. Товарні запаси потребують значного інвестування для більшості виробників, оптових торговців і роздрібних торговців.
5. Зайняті гроші повертаються (is repaid) з доходу від продажу.

V.. Answer the questions.
1. Is money needed to start a business?
2. When may temporary financing be needed?
3. What kinds (види) of financing do you know?
4. What is short-term financing?
5. What is cash flow?
6. What is the ideal cash flow?
7. What can cause a cash flow problem?
8. Does inventory require considerable investment for most manufacturers, wholesalers and retailers?
9. Why do manufacturers often need short-term financing?
10. For what purpose (мета) is the borrowed money often used by the manufacturers?
11. When is the borrowed money usually repaid?
12. What is long-term financing? ,.:
13. For what purpose is long-term financing needed?
14. Are the amounts of long-term financing greater than those of short-term financing?

VI. Make up a written abstract of the above text.

VII. Retell the prepared abstract.

Unit 6

Sources of Unsecured Financing

Unsecured financing is financing for which collateral is not required.
Most short-term financing is unsecured. Sources of unsecured short-term financing include trade credits, promissory notes, bank loans, commercial papers, and commercial drafts.

1. TRADE CREDIT

Wholesalers may provide financial aid to retailers by allowing them thirty to sixty days (or more) in which to pay for merchandise. This delayed payment, which may also be granted by manufacturers, is a form of credit known as trade credit or the open account. More specifically, trade credit is a payment delay that a supplier grants to its customers.
Between 80 and 90 percent of all transactions between businesses involvesome trade credit. Typically, the purchased goods are delivered along witha bill (or invoice) that states the credit terms. If the amount is paid ontime, no interest is generally charged. In fact, the seller may offer acash discount to encour-. age prompt payment. The terms of a cash discountare specified on the invoice.

2. PROMISSORY NOTES ISSUED TO SUPPLIERS
A promissory note is a written pledge by a borrower to pay a certain sumof money to a creditor at a specified future date. Unlike trade credit,however, promissory notes usually require the borrower to pay interest.
Although repayment periods may extend to one year, most promissory notesspecify 60 to 180 days. The customer buying on credit is called the makerand is the party that

issues the note. The business selling the merchandise on credit is calledthe payee.
A promissory note offers two important advantages to the firm extendingthe credit. First, a promissory note are negotiable instruments that can besold when the money is needed immediately.

3. UNSECURED BANK LOANS
Commercial banks offer unsecured short-term loans to their customers atinterest rates that vary with each borrower's credit rating. The primeinterest rate (sometimes called the preference rate) is the lowest ratecharged by a bank for a short-term loan. This lowest rate is generallyreserved for large corporations with excellent credit ratings.
Organizations with good to high credit ratings may have to pay the primerate plus 4 percent. Of course, if the banker feels loan repayment may be aproblem, the borrower's loan application may be rejected.
Banks generally offer short-term loans through promissory notes.
Promissory notes that are written to banks are similar to those discussedin the last section.

4. COMMERCIAL PAPER
A commercial paper is a short-term promissory note issued by a largecorporations. A commercial paper is secured only by the reputation of theissuing firm; no collateral is involved. It is usually issued in largedenominations, ranging from $ 5,000 to $ 100,000. Corporations issuingcommercial papers pay interest rates slightly below those charged bycommercial banks. Thus, issuing a commercial paper is cheaper than gettingshort-term financing from a bank.
Large firms with excellent credit reputations can quickly raise largesums of money. They may issue commercial paper totaling millions ofdollars. However, a commercial paper is not without risks. If the issuingcorporation later has severe financing problems, it may not be able torepay the promised amounts.

5. COMMERCIAL DRAFTS

A commercial draft is a written order requiring a customer (the drawee) to pay a specified sum of money to a supplier (the drawer) for goods or services. It is often used when the supplier is insure about the customer's credit standing.

In this case, the draft is similar to an ordinary check with one exception: The draft is filled out by the seller and not the buyer . A sight draft is a commercial draft that is payable on demand-whenever the drawer wishes to collect. A time draft is a commercial draft on which a payment date is specified. Like promissory notes, drafts are negotiable instruments that can be discounted or used as collateral for a loan.

Exercises

I. Translate into Russian.
Source; unsecured financing; promissory note; commercial draft; tradecredit; loan; commercial paper; transaction; delayed payment; credit terms;pay interest; interest rate; invoice; amount; prompt payment; writtenpledge; sum of money; borrower; repayment period; buy on credit; deliver;provide aid; maker; payee; offer loans; credit rating; prime interest rate;questionable credit rating; large denomination; raise large sums of money;drawee; drawer; credit standing; sight draft; time draft; collateral;commercial draft.

II. Find the English equivalents.
Позика; давати позику; відсоток; процентна ставка; незабезпеченефінансування; купувати в кредит; умови кредиту; рахунок-фактура; основнасума; ділова операція; торговий кредит; боргове зобов'язання;комерційна папір; тратта (переказний вексель); умови; забезпечення
(застава); позичальник; трасат (особа, на яку виставлена тратта); трасант
(особа, що виписало переказний вексель-тратту); кредитоспроможність; тратта
(вексель) на пред'явника; термінова тратта.

III. Fill in each blank with a suitable word or word combination.
1. Trade credit is a payment ... that a supplier grants to its customers.
2. The invoice that's .... 3. A promissory note is a written ... by a borrower to pay a certain sum of money at a specified date.
. 4. The customer buying on credit is called ... and is the party that issues the promissory note.
5. The business selling the merchandise on credit is called .... 6. Most promissory notes are ... that can be sold when money is needed immediately.
7. The prime interest rate is the lowest rate charged by a bank for ... loan.
8. A commercial paper is ... issued by a large corporation.
9. A commercial paper is secured only by the ... of the issuing. firm.
10. Issuing a commercial paper is ... than getting short-term financing from a bank.
11. A commercial draft is a written ... requiring a drawee to pay a specified sum of money to the ... for goods or services.
12. A sight draft is a commercial draft that is payable on .... 13. A ... is a commercial draft on which a payment date is specified. 14.
Like promissory notes drafts can be used as ... for a loan.

IV. Translate into English.
1. Джерела незабезпеченого короткострокового фінансування включають торгові кредити, боргові зобов'язання, банківські позики, короткострокові боргові зобов'язання (кредитно-грошові документи) і тратти (переказні векселі).
2. Торговий кредит - це відстрочка платежу, яку постачальник надає своїм клієнтам.
3. Боргове зобов'язання - це письмове зобов'язання позичальника сплатити певну суму грошей кредитору.
4. На відміну від торгового кредиту боргові зобов'язання вимагають, щоб позичальник сплачував відсотки.
5. Комерційні банки надають короткострокові незабезпечені позики своїм клієнтам, які змінюються в залежності від (with) кредитоспроможності кожного позичальника.
6. Комерційна папір - це короткострокове боргове зобов'язання, що випускається великими корпораціями. .
7. Комерційна папір не має спеціального (special) забезпечення.
8. Трата (переказний вексель)-це письмовий наказ, що вимагає, щоб трасат (особа, на яку виставлена тратта) сплатив конкретну суму грошей постачальнику за товари або послуги.
9. Трата часто використовується, коли постачальник не впевнений у кредитоспроможності клієнта.

V. Answer the questions.
1. What is unsecured financing?
2. What are the sources of unsecured short-term financing?
3. What is a trade credit?
4. What is the difference between a promissory note and trade credit?
5. In what case a loan application may be rejected by a bank?
6. What is a commercial paper secured by?
7. Why issuing a commercial paper is cheaper than getting short-term financing from a bank?
8. What is a commercial draft?
9. Can commercial drafts be used as collaterals for loans?

VI. Make up a written abstract of the above text.

VII. Retell the prepared abstract.

Unit7

Accounting

1. GENERAL DEFINITION OF ACCOUNTING

Today, it is impossible to manage a business operation without accurateand timely accounting information. Managers and employees, lenders,suppliers, stockholders, and government agencies all rely on theinformation contained in two financial statements. These two reports - thebalance sheet and the income statement - are summaries of a firm'sactivities during a specific time period. They represent the results ofperhaps tens of thousands of transactions that have occurred during theaccounting period.
Accounting is the process of systematically collecting, analyzing, andreporting financial information. The basic product that an accounting firmsells is information needed for the clients.
Many people confuse accounting with bookkeeping. Bookkeeping is anecessary part of accounting. Bookkeepers are responsible for recording (orkeeping) the financial data that the accounting system processes.
The primary users of accounting information are managers. The firm'saccounting system provides the information dealing with revenues, costs,accounts receivables, amounts borrowed and owed, profits, return oninvestment, and the like. This information can be compiled for the entirefirm; for each product; for each sales territory, store, or individualsalesperson; for each division or department; and generally in any way thatwill help those who manage the organization. Accounting information helpsman -agers plan and set goals, organize, motivate, and control. Lenders andsuppliers need this accounting information to evaluate credit risks.
Stockholders and potential investors need the information to evaluatesoundness of investments, and government agencies need it to confirm taxliabilities, confirm payroll deductions, and approve new issues of stocksand bonds. The firm's accounting system must be able to provide all thisinformation, in the required form.

2. THE BASIS FOR THE ACCOUNTING PROCESS

The basis for the accounting process is the accounting equation. It showsthe relationship among the firm's assets, liabilities, and owner's equity.
Assets are the items of value that a firm owns - cash, inventories, land,equipment, buildings, patents, and the like.
Liabilities are the firm's debts and obligations - what it owes toothers.
Owner's equity is the difference between a firm's assets and itsliabilities - what would be left over for the firm's owners if its assetswere used to pay off its liabilities.
The relationship among these three terms is the following:
Owners 'equity = assets - liabilities
(The owners' equity is equal to the assets minus the liabilities)
For a sole proprietorship or partnership, the owners 'equity is shown asthe difference between assets and liabilities. In a partnership, eachpartner's share of the ownership is reported separately by each owner'sname. For a corporation, the owners 'equity is usually referred to asstockholders 'equity or shareholders'equity. It is shown as the total valueof its stock, plus retained earnings that have accumulated to date.
By moving the above three terms algebraically, we obtain the standardform of the accounting equation:
Assets = liabilities + owners 'equity
(The assets are equal to the liabilities plus the owners' equity)

3. A BALANCE SHEET

A balance sheet (or statement of financial position), is a summary of afirm's assets, liabilities, and owners 'equity accounts at a particulartime, showing the various money amounts that enter into the accountingequation. The balance sheet must demonstrate that the accounting equationdoes indeed balance. That is, it must show that the firm's assets are equalto its liabilities plus its owners 'equity. The balance sheet is preparedat least once a year. Most firms also have balance sheets prepared semi -annually, quarterly, or monthly.

4. AN INCOME STATEMENT

An income statement is a summary of a firm's revenues and expenses duringa specified accounting period. The income statement is sometimes called thestatement of income and expenses. It may be prepared monthly, quarterly,semiannually, or annually. An income statement covering the previous yearmust be included in a corporation's annual report to its stockholders.

5. THE IMPORTANCE OF THE ABOVE TWO STATEMENTS

The information contained in these two financial statements becomes moreimportant when it is compared with corresponding information for previousyears, for competitors, and for the industry in which the firm operates. Anumber of financial ratios can also be computed from this information.
These ratios provide a picture of the firm's profitability, its short-termfinancial position, its activity in the area of accounts receivables andinventory, and its long-term debt financing. Like the information on thefirm's financial statements, the ratios can and should be compared withthose of past accounting periods, those of competitors, and thoserepresenting the average of the industry as a whole.

Exercises

I. Translate into Russian.

Accounting; bookkeeping; accounting information; lender; stock; stockholder; financial statement; balance sheet; income statement; assets; liabilities; owners 'equity; bond; debt; annual report; profitability; accounting period; return on investment; soundness of investment; issue of stocks and bonds; revenue; profit; account receivable; transaction; amount; own; owner; relay on; report; borrow; deal with; confirm; approve; provide; compare.

II. Find the English equivalents.

Бухгалтерський облік (бухоблік); точна і своєчасна інформація; акціонер; кредитор; відомство (агентство); звіт
(доповідь); балансовий звіт; звіт про доходи; звітний період; рахівництво
(бухгалтерія); фінансова інформація; прибуток (доход); вигода (прибуток);прибуток на інвестований капітал; дебіторська заборгованість;зобов'язання; грошове зобов'язання (пасив); платіжна відомість; акція
(цінний папір); активи; борг; рахунок прибутків (іубитков); щорічний звіт;прибутковість; власний акціонерний капітал; схвалювати; порівнювати;підтверджувати; позичати (брати в борг); обробляти (інформацію).

III. Fill in the blanks.
1. Managers, lenders, suppliers and government agencies relay on the information contained in two .... 2. These two reports - the balance sheet and ... - Are summaries of a firm's activities during a specific time period.
3. The basis for the accounting process is .... 4. Assets are the ... that a firm owns.
5. Liabilities are the firm's debts and .... 6. Owners 'equity is the difference between a firm's ... and its liabilities.
7. A balance sheet is ... of a firm's assets, liabilities, and owners 'equity accounts at a particular time.
8. A balance sheet must demonstrate that the accounting ... does indeed balance.
9. An income statement is a summary of a firm's revenues and
... during a specific accounting period. >

10. The information in these two financial statements becomes

more important when it is ... with corresponding information

for previous years or past ... periods.

IV. Translate into English.
1. Бухгалтерський облік - це процес систематичного збору та повідомлення фінансової інформації.
2. Балансовий звіт та звіт про доходи є (are) основою процесу бухобліку.
3. Балансовий звіт (або звіт про фінансовий стан) - це (is) узагальнений звіт про активи фірми, пасивах і власному акціонерному капіталі.
4. Звіт про доходи - це узагальнений звіт про доходи і витрати за (during) конкретний звітний період.
5. Основою процесу бухгалтерського обліку є буху-парне рівняння.
6. Згідно (according to) бухучетному рівняння активи рівні пасивів
(грошовим зобов'язанням) плюс власний акціонерний капітал.
7. Власний акціонерний капітал-це різниця між активами та пасивами.
8. Балансовий звіт має показувати, що бухучетное рівняння балансується.
9. Результати (results) балансового звіту повинні порівнюватися (be compared) з результатами за (for) минулий звітний період.
10. Ця інформація дає картину прибутковості фірми, її фінансового стану і її діяльності в області (area) дебіторської заборгованості, товарних запасів і боргового фінансування.

V. Questions and assignments.
1. What is accounting? Give a short definition.
2. Is it possible to manage a business operation without accurate and timely accounting information?
3. Who needs accounting information? Explain why.
4. What is the basis for accounting process?
5. State (викладете) the standard form of the accounting equation.
6. What is a balance sheet? Give a short definition.
7. What must a balance sheet show?
8. What is an income statement?
9. What can be computed from the information contained in a balance sheet and an income statement?

10. Do the ratios computed from this information provide a picture of a firm's profitability and its financial position?
11. Is this information for competitors?

VI. Read and translate this newspaper advertisement.

VII. Answer the questions.
1. What is the name of the firm that has published this ad (advertisement)?
2. Who is the firm's client?
3. What information have you got about the bank for which the firm works?
4. What kind of (яких) specialists does the firm invite?
5. What kind of experience must the invited professionals have?
6. Does experience in accountancy matter (має значення) 1
7. What will preferred candidates demonstrate?
8. What chief traits (основні риси) of character must the applicants have?
9. Is it necessary to send a full curriculum vitae to Michael Page City firm?
10. What words in the ad characterize the team within which the selected applicants will work?

Unit 8

Operations Management

Operations management consists of all the activities that managers engagein to create products (goods, services, and ideas). Operations are asrelevant to service organizations as to manufacturing firms. In fact,production is the conversion of resources into goods or services.

1. A technology is the knowledge and process the firm uses to convertinput resources into output goods or services. Conversion processes vary intheir major input, the degree to which inputs are changed, and the numberof technologies employed in the conversion.
2. Operations management often begins with the research and productdevelopment activities. The results of R & D may be entirely new products orextensions and refinements of existing products. The limited life cycle ofevery product spurs companies to invest continuously in R & D.
3. Operations planning is planning for production. First, design planningis needed to solve problems related to the product line, requiredproduction capacity, the technology to be used, the design of productionfacilities, and human resources. Next, operational planning focuses on theuse of production facilities and resources. The steps in this periodicplanning are (1) selecting the appropriate planning horizon, (2) estimatingmarket demand, (3) comparing demand and capacity, and (4) adjusting outputto demand.
4. The major areas of operations control are purchasing, inventorycontrol, scheduling, and quality control. Purchasing in-

volves selecting suppliers and planning purchases. Inventory control is the management of stocks of raw materials, work process, and finished goods to minirnize the total inventory cost. Scheduling ensures that materials are at the right place at the right time - for use within the facility or for shipment to customers. Quality control ensures that products meet their design specifications.

5. Automation, the total or near-total use of machines to do work, is rapidly changing the way work is done in factories and offices. A growing number of industries are using programmable machines called robots to perform tasks that are tedious or hazardous to human beings. The flexible manufacturing system combines robotics and computer-aided manufacturing to produce smaller batches of products more efficiently than the traditional assembly line.