2.5.2 Complete the following text using suitable words or phrases from the box below.

liquidation, finance, mismanagement, survival, a boom period, obsolete, growth rate, input of funds, affairs

It is observed that many firms have been liquidated not because their technology was……………… or because their products were not in demand, but that there was a ……………….. of financial …………... Even in ……………….., when a company make high profits there is also a fear of ……………….. because of bad financial management.

Financial management optimizes the output from the given………….. In case of newly started companies with a high………….. it is more important to have sound financial management since…………….. alone guarantees their………….

2.5.3 Complete the text. Replace the Russian words and phrases by English equivalents.

As funds can be procured from multiple sources so (привлечение капитала) is considered an important problem of business concerns. In the globalised competitive scenario, mobilization of funds (играть важную роль). Funds can be raised either through (внутренний рынок) or from abroad. Foreign Direct Investment as well as Foreign Institutional Investors are two (основные источники привлечения капитала). Funds obtained from different sources (иметь различные характеристики) in terms of potential risk, cost and control. (Стоимость капитала) should be at minimum for a proper balancing of risk and control.

(Эффективное использование средств) as an important aspect of financial management avoids the situations where funds are either kept idle or proper uses are not being made. Funds procured (повлечь затраты и риски). If the funds are not used properly (управление бизнесом) will be too difficult. So it is crucial employ the funds properly and profitably.

2.5.4 Text for discussion.

1. Look up the dictionary for the meaning and pronunciation of the following words and word-combinations.

to  issue debentures

financial leverage

common shareholders

adverse affect

solvency

liquidity

to be availed

2. Briefly scan the text and outline the list of major points.

3. Read the text more carefully and comment on the following problems:

-  The major sources from which a company may obtain funds.

-  Speak on the methods used for the evaluation of a firm's performance

Methods of Financial Management: In the field of financing there are multiple methods to procure funds. Funds may be obtained from long term sources as well as from short term sources. Long term funds may be procured by owners that are shareholders, lenders by issuing debentures, from financial institutions, banks and the general public at large. Short term funds may be availed from commercial banks, public deposits, etc. Financial leverage or trading on equity is an important method by which a finance manager may increase the return to common shareholders. At the time of evaluating capital expenditure projects methods like average rate of return, pay back, internal rate of returns, net present value and profitability index are used. A firm can increase its profitability without adversely affecting its liquidity by an efficient utilization of the current resources at the disposal of the firm. A firm can increase its profitability without negatively affecting its liquidity by efficient management of working capital. Similarly, for the evaluation of a firm's performance there are different methods. Ratio analysis is a common technique to evaluate different aspects of a firm. An investor takes in to account various ratios to know whether investment in a particular company will be profitable or not. These ratios enable him to judge the profitability, solvency, liquidity and growth aspect of the firm.