Finance English practice: Unit 14 — The Other Financial Statements

Biz English

Apr 14, 2016

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Complete the sentences below. Use the key words if necessary.
- The profit and loss account
  
  key words
  profit and loss account ○ Non-profit organizations ○ income and expenditure account ○ surplus ○ total sales revenue ○ turnover ○ cost of sales ○ cost of goods sold ○ gross profit ○ selling, general and administrative expenses ○ EBITDA ○ EBIT ○ net profit ○ bottom line
  
  Companies' annual reports contain a . This is a financial statement which shows the difference between the revenues and expenses of a period. such as charities, public universities and museums generally produce an . If they have more income than expenditure this is called a rather than a profit.
  
  At the top of these statements is or : the total amount of money received during a specific period. Next is the , also known as (COGS): the costs associated with making the products that have been sold, such as raw materials, labour, and factory expenses. The difference between the sales revenue and the cost of sales is . There are many other costs or expenses that have to be deducted from gross profit, such as rent, electricity and office salaries. These are often grouped together as (SG&A).
  
  The statement also usually shows (earnings before interest, tax, depreciation and amortization) and (earnings before interest and tax). The first figure is more objective because depreciation and amortization expenses can vary depending on which system a company uses.
  
  After all the expenses and deductions is the , often called the . This profit can be distributed as dividends (unless the company has to cover past losses), or transferred to reserves.
  
  The cash flow statement
  
  key words
  cash flow statement ○ operations ○ investing ○ financing ○ funds flow statement ○ statement of total recognized gains and losses
  
  British and American companies also produce a . This gives details of cash flows — money coming into and leaving the business, relating to: — day-to-day activities; — buying or selling property, plant and equipment; — issuing or repaying debt, or issuing shares.
  
  The cash flow statement shows how effectively a company generates and manages cash. Other names are sometimes used for it, including and source and application of funds statement.
  
  British companies also have to produce a (STRGL), showing any gains and losses that are not included in the profit and loss account, such as the revaluation of fixed assets.
British English or American English?
- net profit
  - American English
  - British English
- net income
  - British English
  - American English
- profit and loss account
  - American English
  - British English
- income statement
  - British English
  - American English
Which figure in each of the following pairs is higher for a profitable company?
- cost of sales or sales revenue — . . .
  sales revenue
  - cost of sales
  - sales revenue
- gross profit or net profit — . . .
  gross profit
  - net profit
  - gross profit
- EBIT or EBITDA — . . .
  EBITDA
  - EBITDA
  - EBIT
- net profit or pre-tax income — . . .
  pre-tax income
  - pre-tax income
  - net profit
- income tax or net profit — . . .
  net profit
  - net profit
  - income tax
Complete the text with words below.
- . . .
  Operations
  means making money by selling goods and services.
  - Operations
  - Investing
  - Financing
- . . .
  Investing
  is spending cash, for the business's future growth, including cash acquired by selling assets.
  - Operations
  - Investing
  - Financing
- . . .
  Financing
  involves raising money by issuing stocks and bonds (and also paying dividends and interest and repaying bonds).
  - Financing
  - Operations
  - Investing
- It is better for the company if it can pay for future growth out of money from . . .
  operations
  , without having to use financing.
  - operations
  - financing
  - investing
- So, a 'healthy' cash flow means that the amount of cash provided by operations is greater than the cash used for . . .
  investing
  .
  - financing
  - operations
  - investing
Would the following appear as operating, financing or investing activities on a cash flow statement?
- Changes in operating assets and liabilities — . . .
  operating activities
  - investing activities
  - operating activities
  - financing activities
- Dividends paid — . . .
  financing activities
  - investing activities
  - financing activities
  - operating activities
- Purchase of plant and equipment — . . .
  investing activities
  - financing activities
  - investing activities
  - operating activities
- Net income — . . .
  operating activities
  - operating activities
  - financing activities
  - investing activities
- Issuance of stock — . . .
  financing activities
  - financing activities
  - investing activities
  - operating activities
- Payments to repurchase stock — . . .
  financing activities
  - financing activities
  - operating activities
  - investing activities
- Sale of property — . . .
  investing activities
  - operating activities
  - investing activities
  - financing activities
- Depreciation and amortizations expenses — . . .
  operating activities
  - operating activities
  - investing activities
  - financing activities
- Income taxes payable — . . .
  operating activities
  - investing activities
  - financing activities
  - operating activities
- Repayment of debt — . . .
  financing activities
  - operating activities
  - investing activities
  - financing activities

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