Finance and banking

Companies and individuals often borrow money, and it is important to find a favourable interest rate. Rates are variable and can rise or fall depending on the market. Many investors (people whouse their money to earn more money) choose foreign or offshore bank accounts because they are tax-free. Anyone can buy shares in a public company and become a shareholder. All public companies are obliged by law to publish their financial results at the end of the tax year. They do this in their annual reports to shareholders. Annual reports include profit and loss accounts which show turnover, or the total sum of money which is coming into the company. It is (profit and loss account) basically a statement of the cash available to a company, the money to continue its operations. And it's information to managers in helping them make their decisions in running the company and very importantly, it's information to the shareholders how well their investment in that company is working for them. The figures showing turnover would be the most interesting for any manager. Reading the loss and profit account from left to right managers can see whether the company is in fact generating more or less cash year on year. But turnover is not the same as profit because it actually costs money to produce or to run the company. The other important thing is an operating profit, this will show what surplus or how much money the company's making after paying for its production costs. So looking at the operating profit this should give managers the idea on how efficiently they're running the company. If the profit is not high enough company may need to raise money in order to grow. It can choose between 2 options: to issue shares and sell them to the general public or to borrow money from a bank. Banking sector is usually made up of a variety of different institutions which are supervised by the country's central bank. The bank of England in Britain or the Central Bank of Russia in Russia. This bank doesn't look only after both the government finance and monetary policy but it also eats as banker to other banks. However, for the general public and many businesses banking services are provided by commercial banks (also called the Clearing Banks) which have offices or branches throughout the country. These banks offer a wide range of banking services which include accepting deposits, making loans and managing their customers' accounts. Merchant Banks, on the other hand, do not deal with the public in general but specialize in providing services to companies or corporate customers. They are practically active in arranging mergers and acquisitions and in advising on aspects of corporate finance.

Дата добавления: 2015-08-03