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lesson 32. HOW DO EXCHANGE RATES FUNCTION? THE POLITICAL SYSTEM OF THE USA.
Ilova 1 (22.1)
Other aspects of profitability
Read the short text below on profitability. Match the underlined phrases (1-9) to phrases with a similar meaning in the box.
budgeted income statement current liabilities stock
capital employed debtors turnover
current assets net income work-in-progress
A Assessing the strength of a company
Two documents provide the necessary information for the most important decisions about the strength of a business: a (1) forecast profit and loss account and the present balance sheet.
B Profitability
A study of profitability must look at the relationship between:
• (2) income after all costs have been deducted and (3) total invoiced sales; |
• net income and the amount of (4) money invested in the business.
C Liquidity
A study of a company's ability to make enough cash should show if:
• the planned cash balance is satisfactory;
• (5) people who owe money are likely to pay on time;
• (6) work which has been contracted but not yet invoiced or (7) finished goods will one day be sold;
• the relationship between fixed assets and (8) cash or other items of value which can easily be converted into cash is satisfactory;
• the relationship between current assets and (9) debts due for payment is satisfactory, i.e. current assets should be much greater than liabilities.
Management should be careful with forecasts, because budgeting is not a science and forecasts cannot be exact.
Ilova 2 (22.1)
Stock Exchanges
Complete the crossword below.
Across
1 The city which is the financial capital of Germany. (9)
5 Goods like coffee, tea, cocoa, metals and oil that are traded in large quantities. (11)
6 The index of share prices in the New York Stock Exchange. (3, 5)
7 An acronym for a company that has shares quoted on the UK Stock Exchange. (3)
9 A computer measurement of the share performance of 100 leading UK
companies. (7)
10 A contract to buy shares at a fixed price in the future. (6)
11 A part of a company's total capital that can be bought and sold. (5)
Down
2 A method of raising capital by selling new shares to existing shareholders at a
low price. (6, 5)
3 Safe investments in the largest and most powerful companies. (4, 4)
4 A relatively safe investment issued by governments or large companies which
earns interest for the holder. (4)
8 The place where stocks and shares are traded in Paris. (6)
Ilova 3
If every country in the world used the same currency, world trade would be made much easier. But this is not the case: a Copenhagen beer producer wants to be paid in Danish “kroner”, and a Hong Kong shirtmaker wants to be paid in Hong Kong dollars.
Currencies, like other commodities such as beer and shirts, have a certain value. The only difference is that each currency's value is stated in terms of other currencies. French francs had a value in U.S. dollars, which have a value in British pounds, which have a value in Japanese yen. These exchange rates change every day and are constantly updated in banks and foreign exchange offices around the world.
The world's foreign exchange markets keep track of the values of all of the major currencies. As some increase in value, others decline. When a Euro goes up in value against the U.S. dollar, the dollar must go down against the Euro. At the same time, it may decline in value against the British pound. Foreign exchange is a constantly changing twenty-four-hour-a-day market with trading going on in hundreds of financial centers around the world, from Singapore to San Francisco and from Oslo to Buenos Aires.
These markets are all linked electronically. Banks and "Bureaus de Change" look at this global interbank market to set their daily rates, which are given to foreign travelers when they change their money abroad.
As anyone traveling abroad will notice, the exchange rate is slightly different if
the customer is buying or selling any one particular currency. This spread between the "buy" and "sell" rates ensures that banks and exchange bureaus make a small profit every time one currency is changed into another. By exchanging money back and forth times, an indecisive traveler would-end up with nothing, after losing a few percentage points in spreads and commissions on each transaction.
How do the foreign exchange markets decide how much a currency is worth? Just like other markets, the foreign exchange market is subject to the laws of supply and demand. If enough traders want to buy U.S. dollars, its value will go up, i.e., it will take more of other currencies to buy dollars.
Foreign exchange prices are influenced by economic and political events and sometimes by the speculation of individual traders. Foreign exchange traders, like traders in grain or pork bellies, sometimes "bet" that a currency will increase in value. If interest rates fall in Tokyo, traders may rush to sell yen and buy dollars. If the Swedish economy looks strong, the krona may increase in value. If political turmoil threatens the Swedish economy, the krona may decline in value as investors sell them to buy what they perceive to be more stable currencies.
During periods of economic turmoil, the world often turns to a particular currency as a refuge. When political or social unrest threatens other currencies around the world, traders and investors sometimes rush to buy hard currencies like the U.S. dollar, which is expected to preserve its value in times of trouble.
Key words:
prediction предсказание башорат килиш
economic theory экономическая теория иктисодий назария
generalization обобщение умумлашма
quantitative количественный микдорий
average средний показатель уртача курсатма
household условная семья шартли оила
economic model экономическая модель иктисодий модель
deduction and induction дедукция и индукция дедукция ва индукция
simplify упрощать соддалаштириш учун
variable переменная величина узгармайдиган
constant постоянный доимий
purchase покупать, покупка сотиб олмок
income доход фойда
assumption аксиома, допущение аксиомалар, тахмин
other things being equal при прочих равных условиях бошка нарсалар тенгдир
micro- and macroeconomics микро- и макроэкономика иктисодиёт
management менеджмент бошкариш
marketing маркетинг маркетинг
finance финансы и денежное обращение молия ва пул айланмаси
accounting бухгалтерский учет бухгалтерия хисоби
logistics логистика логистика
research and development НИОКР илмий тадкикотлар ва ишлаб чикиш ишлари
EXERCISES: C OMPREHENSION CHECK
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