I. Write sentences with the following words

Writing and Speaking Tasks

III. Without looking back at the next, exchange its content with someone who read the text too.

II. Mark these statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information.

1. It is in the firm's interest to pay bills as quick as possible.

2. Long-term expenditures are usually more carefully planned than are short-term expenditures.

3. Sellers can adjust credit terms slightly to influence when customers pay their bills.

4. Financial managers extend credit to all customers.

5. Companies need funds to cover only operating expenditures.

6. Long-term expenditures don't differ from short-term expenditures.

7. The largest single category of short-term debt for most companies is accounts payable.

8. Work-in-process inventory consists of items ready for sale.

9. Acquisition of fixed assets requires a very large investment.

10. Accounts receivable represent an investment in products on which the firm has not yet received payment.

Example: a great deal of / financial managers / attention to / of credit sales / devote / the efficient management

Financial managers devote a great deal of attention to the efficient management of credit sales.

1. converted / are not/ cash / into / normally / fixed assets

2. crucial / business success / to / are / capital expenditures

3. to cover / funds / companies / operating / expenditures / need / and/ capital

4. firms / deny / with / repayment histories / poor / to / credit / financial managers

5. major / a / represents / dollar / inventory / investment

6. involves / the largest need / cash / for manufacturing firms / for / fixed assets / purchasing

7. unsold products / raw materials / and / tied up / in some / are / substantial funds

8. as / credit purchases / in / are called / accounts receivable / financial statements

II. Write questions to the following answers.

1............................................................................

For most firms - producers, wholesalers, and retailers -inventory requires considerable dollar investment.

2............................................................................

The financial plan identifies the firm's specific cash needs and when they will be needed. 3............................................................................

Day-to-day operating requirements call for funds to pay bills, meet payrolls, make interest payments, and pay taxes.

4.........................................'....................................

Inventory in the form of raw materials, work in process, or finished goods requires considerable funds.

5.........................................................................

When funds on hand exceed cash needs, the financial manager may choose to make a number of investments designed to earn interest.

6............................................................................

Major purchases of land, buildings, and equipment may involve sizable outlays of funds. 7............................................................................

Additional funds are tied up in accounts receivable if the firm allows customers to buy on credit.

8............................................................................

Most firms hold some inventory in order to satisfy customer demand quickly.

III. Describe how financial managers meet businesses' short-term needs for funds.

IV. Describe how financial managers meet businesses' long-term needs for funds.

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