All firms need capital to apply it in business. As well money for running costs such as wages, material and rent, they need to have financial reserves. Extra capital may be needed to expand by buying new premises or  developing new products. Firms may also need working capital to preserve cash flow through the business, for instance if there is time-lag between producing goods and services and getting paid for them.  

There are four main ways of obtaining capital:

§ retained profit;

§ borrowings;

§ share issues;

§ governments grants and loans.

Retained profit is the amount of profit after tax that directors of a business decide not to distribute to their shareholders, but to keep within the business. 

Borrowingmoney usually accounts for 20-30 per cent of firm’s capital. There are several types of lenders to business: commercial banks, leasing, hire purchase, debt factoring, Stock Exchange.

When companies raise finance by selling shares for the first time they make share issues, share flotation or share offerings.

They government has a variety of schemes which give grants or cheap loans to the firms for certain purposes.   

Exercise 1. Give the English for:

залучати фінанси, управляти витратами, мати фінансові резерви, додатковий капітал, купувати нові приміщення, потік готівки, виробництво товарів та послуг, здобувати капітал, нерозподілений прибуток, позика коштів, випуск акцій, держані субсидії, податок, акціонери, кредитор, фондова біржа. 

Exercise 2. Match words from the list A with words from the list B that have a  similar  meaning:

       A                                                B

share flotation                            stockholder

creditor                                       instalment plant

hire purchase                              lender  

shareholder                                share offering

profit                                          purchase 

obtain                                         earnings 

preserve                                     enlarge  

buy                                             keep

expand                                       get

Exercise 3. Match the words and phrases  with the correct definitions  from the list below:

premises, grant, share flotation, retained profit, working capital, lender, reserve, hire purchase, loan, borrowings, cash flow, reserve finance;

1.  money as a resource for business and other activities;