Name :………………………………………..

Nim :…………………………………………
Class :…………………………………………

Financing A Business
Most of the money used by business comes from the sale of its products and services. Since these funds come
from within the firm they are described as internal funds. The rest must come from outside , or external funds.

As a firm sells its products or services, it receives money, which it uses to meet its expenses. One of these
expenses, depreciation, represents the cost of replacing assets (like tools, machinery, and buildings) the wear out.
Typically, businesses use internal funds to cover the cost of depreciation.

Business loans are generally classified as either short-term or long-term loans. For short-term loans, the principal
(the amount borrowed) must be repaid within one year. Long-term mature (come due) in more than a year.

Short-term loans are used to finance the everyday costs of doing business, such as payrolls, raw materials and
merchandise. Long-term loans are more likely to be used to purchase equipment, buildings and other high cost
items.

All corporations issue common stock; some, however, also issue preferred stock. Unlike common stockholders,
preferred stockholders usually do not have voting rights.

A security exchange is a market where brokers meet to buy and sell stocks and bonds for their costumers.

The largest of the securities exchanges are the New York Stock Exchange and the American Stock Exchange.

There is some risk of default (failure to pay interest or principal) on the bonds of even the strongest corporations.
For this reason many people invest in mutual funds. Mutual funds are corporations that sell stock and use the
proceeds to invest or speculate in the security markets.

Two of the most important pieces of information contained in every prospectus and annual report are the
balance sheet corporation’s assets, what it owns; its liabilities, what it owes; and its net worth, the difference
between the two sums at given time. The income statement summarizes a firm’s revenues, costs, and the
difference between the two (the profit or loss) over a period of time.

Answer the following questions using complete sentences

1. Where does the most of the money used by business come from?
2. What do we call internal funds?
3. What does depreciation represent?
4. What remains after paying expenses?
5. How do you understand the term “external funds”?
6. What can the firm do to get more money?
7. What rights have common stockholders?
8. What is the difference between common and preferred stockholders?
9. What is the reason for investing in mutual funds?
10. How do you read a balance sheet and income statement?

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 Define the terms
Internal funds Preferred Stock
Common stock Depreciation
Balance Sheet Mutual Funds
The Principal To have voting rights

Exercise
Fill in the blanks with the Present Simple or Present Continuous:
1. Ted ____________ (take) a shower right now.
2. What ____________ (we / have) for dinner tonight?
3. My brother __________________ (have) a daughter and a son.
4. I __________________ (not / solve) some math problems at the moment.
5. My grandfather often _________________ (come) over for dinner at the weekends.
6. My school _________________ (begin) at nine every day.
7. What time ________________ (you / wake up) on weekdays?
8. What ________________ (you / do) tomorrow night?
9. I usually ____________ (not / work) on Sundays but today I _______________ (work).
10. She _______________ (not / sleep) now, she _______________ (study).

Complete the present simple and present continuous wh-questions.

1. Her brother gets up very early every day.
What time ____________________ on Saturdays and Sundays?

2. I am working as a receptionist at the Hilton Hotel now.

Why ________________________ at a hotel? You are a teacher.

3. She studies English history and literature.

Where _______________ them? At University of Aberdeen?

4. They want to go to Hastings on their holiday.

When______________ to go? In summer?

5. Sarah's grandparents are watching a science fiction film with Tom Cruise.
What kind of film_________ ? A sci-fi?

6. I use various techniques when I paint pictures of my family or friends.

Which techniques ___________? Watercolour, pastel or even oil?

7. He is washing something in the laundrette round the corner.

What ______________? Let me guess. His football dress?

8. I help Bill and Josh with their maths and physics homework.
Who _____________with maths and physics?

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9. I believe he isn't using your toothbrush.
But which toothbrush __________?

10. Look, I always do it like this. It's really easy.

How _____________it? Show me again, please.

Read answers in the dialogues and make present simple and present continuous questions.
1.What time_________ every day?
I start work at 7 every day.

2. ____________at weekends?
No, Ben doesn't work at weekends.

3. What __________, Peter?

Well, I am not doing anything.

4. ___________to school?
No, she does not go to school.

5. And what __________now?

She is doing some shopping, I think.

6. Where ____________the shopping?

She does the shopping at a shopping centre.

7. Who____________ her with shopping bags?

Our son helps her as usual.

8. _____________together today?
No, they aren't shopping together today.

9. Why ___________dinner so late every day?

They only have dinner so late on weekdays.

10. ______________at a hotel?

No, we aren't. We are staying at the Beacon Campsite.

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