CORPORATE FINANCE

Vocabulary

1.equity funding 1. фінансування з власних коштів

2. share 2. частка, акція, пай
3. negotiable 3. відчужуваний, обіговий
4. чистий актив (капітал)
4. net assets
5. позичати
5. to borrow 6. вексель, боргове зобов’язання
6. note 7. прибутковий
7. profitable 8. резерв, запас
8. inventory 9. ресурси, надходження
9. supplies 10.знижувати
10. to deduct 11.втрата
12.безнадійний борг
11. loss
12. bad debt

Corporations need financing for the purchase of assets and the payment of
expenses. The corporation can issue shares in exchange for money of property.
Sometimes it is called equity funding. The holders of the shares form the ownership
of the company. Each share is represented by a stock certificate which is negotiable.
It means that one can buy and sell it. The value of a share is determined by the net
assets divided by the total number of shares outstanding. The value of the share also
depends on the success of the company. The greater the success the more value the
shares have.
A corporation can also get capital by borrowing. It is called debt funding. If a
corporation borrows money, they give bonds or notes. They are also negotiable. But
the interest will be paid out whether business is profitable or not.
When running the corporation, management is to consider both the outflow and
inflow of capital. The outflow is formed by the purchase of the inventory and
supplies, payment of salaries. The inflow is formed by the sale of goods and services.
In the long run the inflow must be greater than the outflow. It will result in a profit.
In addition, a company must deduct its costs, expenses and losses on bad debts,
interest on borrowed capital and other items. It helps to determine if the financial
management has been profitable. The amount of risk involved is also an important
factor. It determines the fund rising and it shows if a particular corporation is a good
investment.

1. Agree or disagree with the statements.

2. When a stock certificate is negotiable, people can buy and sell it. (Ageree)
3. The value of a share doesn’t depend on the success of the company. (Disagree)
4. Notes and bones are not negotiable. (Disagree)
5. When the inflow of capital is greater than the outflow, then the corporation will be
profitable. (Ageree)
6. There is always some risk for the holders of the shares who form the ownership of
the company. (Ageree)

2. Answer the questions.

1. What does debt funding mean?

A corporation can also get capital by borrowing. It is called debt funding.
2. How is the value of the share determined?
The value of a share is determined by the net assets divided by the total number
of shares outstanding. The value of the share also depends on the success of the
company. The greater the success the more value the shares have.
3. How is the outflow of capital formed?
The outflow is formed by the purchase of the inventory and supplies, payment
of salaries.
4. When will the company have a profit?
In the long run the inflow must be greater than the outflow. It will result in a
profit.

Sentences with word-combinations

1. My friend studies equity funding in Business school.

2. I bought shares of Google CO. I think that good investment.

3. Every shops make negotiable price for their customers.

4. All people want to have big net assets.

5. George borrow large loan for her family.

6. Note is good thing for credit field.

7. This product very profitable for our company.

8. All company must have inventory for unexpected cases.

9. Supplies must be bigger that expenses.

10. The shop deducts prices for meat production.

11. Xiaomi lost much money by reason of defective phones or devices.

12. Many succses people said the mortage is bad debt.