Look throogh the text and say if the text is

a) a report for a conference;

b) an article froa a journal;

c) an extract froa a textbook;

d) a newspaper feature.

TEXT 1 ЗА

UNDERSTANDING CAPITAL AND PROFIT Introduction

No business will succeed unless it has a sound financial foundation.

This means that the capital invested in the firm must:

- be sufficient for its needs,

- be organised in the most efficient way.

But what is capital?

Unfortunately, the word capital is used in many ways. Even within the business world, it has various meanings. It is very important that, when you see the word, you ask yourself In what way is this word being used?'

Capital, assets and liabilities

To understand the ways in which the word capital is used, it is necessary to appreciate the nature of a firm's assets and liabilities.

What are assets?

Assets consist of all the things a firm owns, whether these are paid for or not.

Assets fall into two groups. These are:

1. Fixed assets

These remain in the firm for a relatively long period of time Examples include land, premises, machinery, equipment, vehicles. 'Fixed assets' is sometimes referred to as fixed capital - that is, the amount of capital invested in the fixed assets.

2. Current assets

These are constantly being used and replaced during everyday business Examples include stocks (of both raw materials and finished goods), debtors and cash They are sometimes called current or circulating capital This is because they circulate ('go round' in a circle) in normal trading in the following way.

a) The raw materials are turned into finished goods.

b) The finished goods are sold to customers.

c) The customers pay cash.

d) The cash is used to buy more raw materials

<== попередня сторінка	\|	наступна сторінка ==>
Provide money for a project, etc	\|	What are 'liabilities'?

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