Английский язык. Практический курс для решения бизнес-задач
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Leverage.
The leverage ratios measure the company’s use of borrowed funds in relation to the amount of funds provided by the shareholders or owners. These ratios tell the lender how much money you have borrowed versus what money you and other owners have put into your company. This is important because borrowed money carries interest costs and your business must generate sufficient cash flow to cover the interest and principal amounts due to the lender. Generally speaking, companies with higher debt levels will have higher interest costs to cover each month, so low to moderate leverage is nearly always viewed more favorably by prospective lenders.
Debt Ratio
The most common leverage ratio is called, simply, the debt ratio: total liabilities divided by total liabilities plus capital.
Turnover.
The turnover ratios focus on the operating cycle of your business by examining its cash flow. They show the amount of time it takes for cash to move through the accounts receivable, inventory account, and accounts payable in your business.
It is important to know how many days it takes your company to purchase inventory, pay for it, sell it, and collect the cash for the sales. Credit sales may not actually produce cash for 30 to 60 days. If you don’t understand this cycle you can find that you have to pay for new supplies before your customers have paid you.
Gaining an understanding of the cash flow of your business is the most important financial planning tool you have. An examination of the turnover ratios can help you to understand the operating cycle in your business.
The three turnover ratios are the collection period ratio, the days to sell inventory ratio, and the days purchases in accounts payable ratio.
Collection Period Ratio
The collection period ratio indicates how quickly you collect the cash your customers owe you. The earlier you collect it, the sooner you can put it to work; so the lower the number, the better.
Days to Sell Inventory Ratio
Along the same lines is the second turnover ratio, the days to sell inventory ratio. The days to sell inventory ratio tells how efficient you are at matching your purchases to your sales. Low inventory days indicate that you’ve accurately forecasted the demand for your product. That way excess inventory isn’t accumulating on your shelves and adding to costs.
Days Purchases in Accounts Payable Ratio
The days purchases in accounts payable ratio is the third turnover ratio. This ratio measures how quickly you pay your suppliers for inventory purchased. Generally speaking, it is advantageous for small businesses to pay for products promptly so they can take advantage of price discounts.
Pro Forma Financial Statements and Financial Projections.
Pro forma financial statements are the entrepreneur’s best guess about what next year will look like for the business. These tools will help you anticipate whether next year’s cash flow will be sufficient to cover all your costs, and if not, how much money you will need to borrow.
For a longer horizon, financial projections permit you to make estimates about future sales levels, expansion costs, or general business conditions and see how such conditions would affect your company’s financial results in the years to come.
The preparation of pro formas and projections is a complex exercise that requires a sound knowledge of financial accounting. The pro forma statements show how an expected sales increase will change the company’s profit and loss statement and balance sheet forecast for next year.
Source: www.newyorkfed.org
Essential Vocabulary
1. pilot program –
2. credit union – кредитный союз
3. targeted funds – целевые средства
4. application n – заявка, заявление
applicant n– заявитель
5. sole proprietorship – единоличное владение
6. short-term (current) assets – текущие (краткосрочные) активы
7. long-term (fixed) assets – долгосрочные (внеоборотные) активы
8. seasonal commercial loan – сезонный коммерческий кредит
9. installment loan – кредит с погашением в рассрочку
10. collateralized loan – обеспеченный кредит
11. credit card advance – аванс по кредитной карте
12. lump sum – единая сумма
13. compensating balance – компенсационный остаток
14. deposit account (DA) – депозитный счет
15. executive summary – резюме
16. five Cs (capacity to repay, capital, collateral, conditions, character) – пять аспектов оценки при предоставлении кредита
17. pledge n – залог, обеспечение, заклад; дар; обет; обещание
pledge v – закладывать, связывать обещанием, заверять
18. reference n – ссылка; справочник; упоминание; рекомендация; отношение; полномочие
19. net worth – чистая ценность
20. profit and loss statement (P&L) – отчет о прибылях и убытках
21. ratio analysis – анализ коэффициентов
22. gross profit margin – маржа валовой прибыли
23. operating profit margin – маржа операционной прибыли
24. extraordinary items – экстраординарные события (чрезвычайные обстоятельства)
25. quick ratio (acid test ratio) – коэффициент быстрой ликвидности
26. checking account – чековый (текущий) счет
27. current ratio – коэффициент текущей ликвидности
28. debt ratio – отношение заемного капитала к собственному
29. turnover ratio – коэффициент оборачиваемости
30. collection period ratio – средний срок инкассации поступлений
31. days to sell inventory ratio – средний срок продажи запасов