Oral conversational topics on business English language
Методическое пособие - Иностранные языки
Другие методички по предмету Иностранные языки
d above - took control of 90 percent of all banking services and 95 percent of all foreign currency operations in Ukraine. However, over the next three years to 1998 their share of banking services and operations decreased to 60 percent as a result of the tremendous growth of private commercial banks.
The banks accumulated money capital in several unorthodox ways. The directors of loss-making state enterprises lobbied the Verkhovna Rada and the Cabinet repeatedly and successfully for subsidies to keep them afloat. Part of the subsidies was channelled through their banks to finance domestic and foreign trade by their own and other private companies. The big banks directors, representing substantial sectors of the economy, had privileged access to state officials that granted export and import licenses. The banks also got their credit from the National Bank of Ukraine at rates of interest that were far lower than the rate of inflation. Merely by exchanging the coupon credits into hard currency and waiting a few months before buying back enough coupons to repay the loan could the holder earn quite a few dollars. The big banks sold on some of their credits to the smaller, less well connected commercial banks for their use in money and commodity trade, and made an immediate profit from the inflated transaction fees and insurance premiums on the loans. From their own premises and through a network of thousands of franchised street vendors the banks additionally traded in foreign currencies with the population at large, who regularly sought refuge from inflation for their domestic currency earnings in the dollar and were then forced to sell them back as the cost of living spiralled upwards. Thus the wave of inflation which was impoverishing large numbers of people in these years provided a profitable environment for those who received state subsidies, credits and licenses to trade in their capacity as state enterprise managers and who then used them for private and corporate gain in their capacity as directors and shareholders of independent banks.
The government set out to stop the run on state funds from the National Bank and the state budget through to the commercial banks. State officials and enterprise managers with access to various funds (especially agricultural credit and conversion funds) from which they could make speculative earnings were investigated. Under the chairmanship of Viktor Yushchenko, the NBU changed the way it extended credit to the commercial banks from an "administrative division of resources" to credit auctions, and finally by offering state bonds.
In August 1998 the government banned the use of foreign currency as payment in the domestic retail and service sectors. The commercial banks were no longer permitted to hold foreign currencies on deposit, and were required to lodge them with the NBU instead.
The commercial banks developed into new areas when subsidies to state enterprises became more difficult to get and the sharp fall in the inflation rate eliminated the lucrative field for arbitrage. Around thirty banks went to the wall, mainly because they knew no other trade. But the remaining banks - indeed a continually growing number over the period to 1999 - were involved in serving the private sector, lending money to the government, and for the few biggest banks providing services to state sector institutions and programs. Services to the private sector included currency transactions, deposits and trustee operations, but perhaps even more importantly in the order of their commitments, the banks served the shadow economy by providing means to conceal capital, such as channels for capital flight abroad, off-record loans and foreign currency transactions. It was estimated in 1995 that around 40 percent of the total domestic monetary mass was circulating within the shadow economy, unaccounted and untaxed.
The commercial banks had lent the government 760m hryvnia by the first quarter 1999 through debt bonds. The government itself, however, had 540m hryvnia invested in the banks. Therefore the banks were lending the government its own money, and at high rates of interest. This field of activity was limited, and so the biggest five banks turned to the government to ask for preferential treatment in handling such financial operations as servicing the state enterprise budgets, targeted state investment programs, the Pension Fund and other social welfare schemes. In April 1998 the government effectively gave the monopoly on handling state finances to the NBU and to four commercial banks - Ukreximbank, APB Ukraina, Ukrsotsbank and Prominvestbank.
The Ukrainian banks worked mainly to extract a profit from money and commodity trade. Legislation impeded their capacity to mobilize investment. The public preferred to save its earnings if it could save - by buying dollars, consumer durable and building homes, rather than putting hryvnia in bank accounts .Where possible, business owners and managers did not use the banking system in order to evade taxation, preferring instead to facilitate their activities with cash, debt and barter. Banks had very little capital resources of their own: a statutory fund of only $3-5 million, and in some cases less than was officially required. In the critical economic circumstances of contracting production, with the money supply very tight after 1994 as easy credits and subsidies dried up and interest rates matched inflation rates, businesses in Ukraine - both state owned and private - were in no position either to bank earnings or to borrow.
QUESTIONS
- When did Ukrainian banking system begin to form?
- Describe a two tier banking system?
- What are the functions of the NBU?
- Were the first Ukrainian banks state-owned or private? Why?
- Explain the reasons of inflation during 1991-1993?
- How do you understand the definition go to the wall? Did Ukrainian banks go to the wall? Why?
- What do you know about shadow economy and its volume in Ukraine?
- Is the NBU the only bank handling state finances?
- What problems existed in Ukrainian banking system in 1998-2000? Have they been solved?
- Compare the development of Ukrainian banks in 1989-1991 and 1998 and say if the situation has changed greatly since that time.
transaction payment or the process of making one evaluation careful consideration of smth to see how useful or valuable it is cash receipt a written document showing that an amount in cash was paid cash payments journal a book containing details/records of transactions in cash credit sale a sale in which payment will be made in one payment sometime in the future or in smaller regular payments over a period of time balance sheet a document showing a companys financial position and wealth at a particular time net sales money from a companys sales in a particular period of time after taking off goods returned by customers, discounts, etc. operating expense (also overhead expense) money that is spent on the general running of a business or organization, rather than money spent on producing goods or selling services liability an amount of money owed by business to a supplier, lender current ratio the relationship between the total amount that a business has in cash, in its bank accounts, and owed by customers, and the total amount that owes to suppliers quick ratio a calculation of weather a business could pay its debts if sales stopped or slowed down working capital (also operating capital) money used by a business to carry on production and keep trading.
FINANCIAL STATEMENTS
Good record keeping by a business is not only wise, but is required by many laws. Legal and financial questions may be raised by various agencies, banks, and employees. These questions can be accurately answered when written records of business proceedings are kept.
By recording daily transactions, the owner can learn from mistakes and avoid errors in the future. A record of all the events that occur in a business permits evaluation, improvement, and a good chance for personal and financial success.
For a typical small business, it is suggested that the following records be kept: cash receipts and cash payments journal, record of credit sales (sales journal), record of purchases (purchases journal) , record of wages (payroll), operations statement (profit and loss statement or income statement), balance sheet. The results of operations and the present financial position of the firm are reflected in the income statement and the balance sheet. Management decisions must be weighed in terms of their effect on these two basic financial statements.
THE INCOME STATEMENT (the profit and loss statement or the operations statement). This statement is a summary of the income and expenses of the business. The income statement summarizes these facts for any period of time. Income statements may be made for a year, a month, a quarter, or a half-year. Some firms have weekly or daily income statements. Although many items appear on the income statement, the basic idea is very simple. The formula is: NET SALES minus COST OF GOODS equals PROFIT. Amount taken minus Amount paid out equals PROFIT.
With a larger business, expenses change the formula somewhat:
NET SALES minus COST OF GOODS SOLD equals GROSS PROFIT.
GROSS PROFIT minus EXPENSES (RENT, LIGHT, PHONE) equals NET PROFIT
In business there are two kinds of profit: GROSS PROFIT and NET PROFIT.
NET SALES minus COST of GOODS