Пойгина Л.Б., Туринова Л.А. - English for Masters. Management Part 2 (1175657), страница 14

Просмтор этого файла доступен только зарегистрированным пользователям. Но у нас супер быстрая регистрация: достаточно только электронной почты!

Текст из файла (страница 14)

Inevaluating a company's inventory account, determine if it includes obsolete inventory that failed to meet marketdemand. If so, the value of the company's inventory may be overstated. Obsolete inventory does not representliquidity for the company for good collateral value 1 or a leader to liquidate to repay debt.35Whenever management decides to compete more aggressively by keeping inventory stock high, it takes therisk that the demand for the product will suddenly drop. Sometimes companies keen large inventories becauseobtaining supplies is difficult or entails lengthy waits before delivery, as is the case with orders from overseas.Raw Materials InventoryIn addition to finished goods inventory, manufacturers typically hold some raw materials inventory to beused in the manufacturing process. Analysts evaluate these inventory accounts on the same basis as they dofinished goods - that is, in terms of their marketability.

The end use of raw materials determines theirmarketability. If the raw materials have multiple uses and could be liquidated by being sold to variousmanufacturing industries, their marketability is much better than that of a raw material used in a singlemanufacturing process.A large raw materials inventory account can result from speculation in inventory. A company may try tohedge on prices by buying inventory in bulk at a low price in the hope of selling it later at a higher price oravoiding having to purchase it a higher price in the future.

If the price of the goods decreases unexpectedlyinstead of increasing, a large loss may result. Often, companies are not in a position to hold onto excessinventory because they need liquidity. Moreover, holding onto inventory can be expensive, especially duringperiods of high interest rates, if bank financing is required.Work in ProcessThis inventory is the most problematic from the lender's viewpoint; it may be very hard to salvage in caseof a liquidation.

The amount of work in process inventory depends primarily on the length of the productionprocess. If the production process is short, then the value of the company's work in process will be small inrelation to its raw materials and finished goods inventories.However, if the process is complex, as in manufacturing large or heavy equipment, then a more significantproportion of a company's assets may be tied up in work in process.Partially completed products not only require additional investment before they reach the value of finishedgoods, but also usually have a market value that is less than the invested costs. Therefore, the lender shouldassign a low value, if any, to work-in-process inventor,' for loan collateral purposes.A company that makes customized products on order usually has a large work-in-process inventory and nofinished goods inventory since its products are delivered to the buyer immediately upon completion.

Becausethe general marketability of custom-made products is very low, a manufacturer should require substantialdeposits or progress payments while manufacturing the products in order to reduce the risk of custom ordersnot being accepted. Custom-made inventory usually has little collateral value in the eyes of a credit analyst.VII______________________Other outlays of funds that have neither produced benefits nor been expensed on the income statement arecapitalized into prepaid expenses. Examples of prepaid expenses include insurance premiums paid annuallyand lease rentals paid in advance. Prepaid expenses probably provide little liquidity, although they do providea future reduction in current cash outlays.Carrying the prepaid expenses in the current side of the balance sheet is probably best; unfortunately^many companies combine prepaid expenses with current receivables due from officers and affiliates, whichare not very liquid.

Thus, as a practical matter, the combined account is almost always carried noncurrent,unless the analyst is able to separate the accounts.VIII _____________________Other current assets is usually an insignificant account. For example, an analyst would list an income taxrefund due in this account on the spreadsheet. As mentioned above, stock securities, which management mayhave listed in the marketable securities account, may be carried here if management intends them to betemporary investments only.Cash-value life insurance, which representscash deposits built up in a whole-life insurance policy, is another item that might show up in the othercurrent assets account.

A company can use this available cash in the business if the cash value isunencumbered by a loan from the insurance company or other financial institution.The insurance policy's real liquidity depends on the death of the insured. The analyst must determine whois insured and the face value of the policies. The lender should also evaluate the adequacy of the insurancecoverage in terms of the importance of the insured persons to the company and the liabilities that would needto be paid from the proceeds of the insurance policy.362.

Scanning exerciseScan through the text to find information:a)b)c)d)Access to an aging-of-accounts-receivable statement;Finished goods inventory;Cash-value life insurance;The amount of work in process inventory.3. Vocabulary Study exerciseGlossarycurrent assetspriority of liquiditylisted cashdeposits in checking accountsa company's cash accountsupport of bank credit facilitiesmarketable securitiescertificates of depositbanker's acceptancegovernment securitieshigh-grade corporate commercial paperto earn income in the form of interestcurrent value of a company's marketable securities accountto have a short term to maturitythe amount of credit salescustomer's payment habitsa lagging economyan aging-of-accounts-receivable statementa note receivablefinished goods inventoryraw materials inventorywork in processprepaid expensesother current assetscash-value life insurancea) find the following Russian word-combinations in Text 4 and translate them into Russian:Актуальная полемика об области бухгалтерского учета; обсуждаться в порядке взаимозаменяемостии ликвидности; конвертировать в денежные средства; однолетний операционный цикл; текущиеактивы; держать денежные средства в различных формах; выплаты, произведенные чеком иликредитной картой; быть представленными в виде депозитов на текущих счетах; временныеинвестиции под процент; денежные средства, недоступные для ежедневных операций;компенсационные балансы; рыночные ценные бумаги; высоколиквидные корпоративныекоммерческие бумаги; депозитные сертификаты; иметь короткий срок погашения; широкообращаться на рынке; быть подтвержденным большим колебанием цен; быть показателемдолгосрочных интересов; относить к текущим рыночным ценным бумагам в балансовом отчете;счета дебиторов; количество продаж в кредит; сроки кредитов компаний; замедлить платежикредиторам; отстающая экономика; вексель дебитора; чувствительность товаров к моде; товарныезапасы сырья; незавершенное производство; прочие текущие активы; предоплаченные расходы(будущих расходов); страхование жизни в денежных средствах.37b) find the following English word-combinations in the text and translate them into Russian.To be converted by normal operations; a one-year operating cycle; in the accounting model of the world; atopical controversy in the accounting field; to meet the criterion; in order of someone's fungibility andliquidity-cash first; to be listed first in the balance sheet; temporary interest-behaving investments; theavailability of the cash; to be pledged against debt; to become unavailable for daily operations; compensatingbalances; to transfer deposits to domestic operations; to be subject to exchange fluctuations; to determine acompany's cash requirements; to be readily marketable; to pose no risk of losing principles; to be subject towide swings in value; to be indicative of long-term interest; to provide payment terms; to sell merchandise orservices on credit; to offer a discount as incentive for early payment; collection policies; an income statement;to monitor the quality of someone's receivables over time; to spot current repayment trends; to reverse theslowing trend; to be due within 12 months; to pay a past-due accounts receivable; to collect the note on atimely basis; to be related to the style sensivity of merchandise; the general marketability of custom-madeproducts; to have little collateral value in the eyes of credit analyst; to be paid from the proceeds of theinsurance policy.4.

Характеристики

Список файлов книги