|
|
Investors shun Fibernet after rights issueFibernet Group yesterday incurred the anger of investors when it announced it was to raise £77m through a deeply-discounted rights issue. This was partly due to hostile sentiment towards the telecommunications sector. A 23 per cent decline in the stock to £10.20, down 307.5p, reflected alarm at the prospect of more shares being introduced into a market already saturated with telecoms shares. Four new shares are being offered for every existing 15 at a knock-down price of 600p, less than half Wednesday's close of £13.27'/2. The move provides further evidence that deeply-discounted rights issues have returned to fashion. Most of the proceeds are earmarked for investment in the group's planned fibreoptic network in France, with the remainder to be spent in the UK developing digital -subscriber lines (DSL), which provide high-speed internet access through upgraded copper telephone wires. Charles McGregor, chief executive, said the heavy discount was necessary to guard against a repeat of this week's telecoms issues - by KNP of the Netherlands, Telekom Austria and Telefonica Moviles of Spain - which all either fell below or remained close to their issue price. Some analysts questioned why Fibernet, with £41m of cash on its balance sheet, needed more funding at this time. But others said it was a brave move that would ensure its DSL roll-out in the UK and its European expansion, in France and Germany, were not delayed. Small Telecoms operators, such as Fibernet which are competing for the growing demand from businesses for broadband voice and data communications, have found their balance sheets under scrutiny as the high cost of building networks drains their cash. 'The sector will succumb to the laws of natural selection. Well-funded companies will get stronger, while the less well-funded will go bankrupt. This deal leaves Fibernet fully-funded,' said Mr Williams. News of the rights issue obscured results showing pretax profits in the year to August 31 of £3.4m, compared to a £4.6m loss last year - the first time the group had generated a full-year surplus. Turnover was £41.8m up from £14.6m last time. Earnings per share were 7.5p (13p losses).
What was the strategic decision that required the capital Fibernet raised from the rights issue? Using evidence from the text and your own knowledge, explain why you think that Fibernet used a rights issue of shares rather than taking out long-term loans. 3. Examine the likely reaction of shareholders to this financing decision in: - the short term, - the longer term.
VOCABULARY REVISION – UNIT 5 Нью-Йоркская фондовая биржа; внебиржевой рынок ценных бумаг; ценные бумаги; товарная биржа; валютная биржа; повышательная тенденция фондового рынка; понижательная тенденция фондового рынка; участник фондового рынка; основной индекс Нью-Йоркской фондовой биржи; оживленные торги; переходить в другие руки (об акциях); оборот; неоживленные торги; игрок на повышение; игрок на понижение; производные финансовые инструменты; привилегированные акции; компания, чьи акции котируются на бирже; высоколиквидная акция (“голубая фишка”); сырьевые товары; иностранные валюты; выплачивать дивиденды; номинальный доход; доходность акций; коэффициент соотношения цены и доходности акции; отмывание денег; дилер; фирма по торговле ценными бумагами; инвестиционный банк; заключение сделок на бирже; первичное публичное размещение акций; получить биржевую котировку; эмиссия акций; доходы, выручка; фьючерсный контракт; сделка с премией; достичь прежнего уровня; манипулирование рынком; строгое разграничение функций и информации между подразделениями фирмы; незаконные операции с ценными бумагами на основе внутренней информации о деятельности компании-эмитента; гарантийный депозит (маржа), вносимый по срочному биржевому контракту в клиринговую палату.
Part 1 Unit 6 ACCOUNTING AND BANKRUPTCIES
unit 6 accounting AND BANKRUPTCIES
SECTION 1 TYPES OF ACCOUNTING AND THE BASIC ACCOUNTING EQUATION LEAD-IN Accountancy (profession) or accounting (methodology) is the measurement, disclosure or provision of assurance about information that helps managers and other decision makers make resource allocation decisions. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. Calculating an individual’s or a company’s liability for tax refers to tax accounting. Managerial accounting involves preparing budgets and other financial reports necessary for management. Working out the unit costs of products, including materials, labour and all other expenses refers to cost accounting. Auditing, a related but separate discipline, is the process whereby an independent auditor examines an organization's financial statements in order to express an opinion - that conveys reasonable but not absolute assurance - as to the fairness and adherence to generally accepted accounting principles, in all material respects. Accounting means keeping financial records, recording income and expenditure, valuing assets and liabilities with the view of creating accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping, writing down the details of transactions (debits and credits) involved in this process is known as bookkeeping. When a company’s accounts are presented in a way that makes performance look better than it really is, the company may be accused of window dressing or creative accounting.
At the heart of modern financial accounting is the double-entry bookkeeping system. This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors. This system was first used in medieval Europe, although claims have been made that the system dates back to Ancient Greece. The subject of accounting is the calculation of the financial results of an economic entity ’s business activity. Accounting can show the managers or owners of a business whether or not the business is operating at a profit, whether or not the business will be able to meet its commitments as they fall due.
In accounting, it is always assumed that a business is a going concern, i.e. that it will continue indefinitely into the future – which means that the current market value of its fixed assets is irrelevant, as they are not for sale. Consequently, the most common accounting system is historical cost accounting, which records assets at their original purchase price, minus accumulated depreciation charges. In times of inflation, this understates the value of appreciating assets such as land, but overstates profits as it does not record the replacement cost of plant or stock. Assets such as machinery and equipment lose value over time because they wear out, or are no longer up-to-date. This is called depreciation or amortization. For example, when new computers are bought they are depreciated or amortized over a very short period, usually three years, and a charge for this is shown in the financial records: the value of the equipment is written down each year and written off completely at the end. The value of a business’s assets under historical cost accounting – purchase price minus depreciation or amortization – is known as its net book value. A company’s financial performance for a period is its results. Company law specifies that shareholders must be given certain financial information. Companies generally include three financial statements in their annual reports. They are: the balance sheet, the profit and loss account, cash-flow statement.
VOCABULARY
COMPREHENSION QUESTIONS: 1) What does accountancy/accounting refer to? 2) What is bookkeeping? 3) What is the purpose of auditing? 4) Is creative accounting considered to be illegal? 5) How does double-entry bookkeeping system work? 6) What does a going concern refer to? 7) What is the most common accounting system? 8) What is called depreciation/amortization? 9) What is known as net book value? 10) What financial statements do companies usually include in their annual reports?
VOCABULARY PRACTICE Companies record their fixed assets at historical cost because they do not need to know their real value; if a company is a going concern they are not for sale. Historical cost accounting usually underestimates the value of assets that appreciate (gain value), such as land and buildings. A sound understanding of financial statements will help you identify unfavorable trends and tendencies in your business's operations for example, the unhealthy buildup of inventory or accounts receivable, before the situation becomes critical. While amortization and depreciation are often used interchangeably, technically this is an incorrect practice because amortization refers to intangible assets and depreciation refers to tangible assets.
Ford Credit's results were affected by higher borrowing costs, the unit said in a separate statement.
Using all available accounting procedures and tricks to disguise the true financial position of a company is called “ creative accounting ”. Computers enable accountants and auditors to be more mobile and to use their clients’ computer systems to extract information from databases and the Internet. TEXTS TO TRANSLATE: 60. The Power of Four   Система охраняемых территорий в США Изучение особо охраняемых природных территорий(ООПТ) США представляет особый интерес по многим причинам...  Конфликты в семейной жизни. Как это изменить? Редкий брак и взаимоотношения существуют без конфликтов и напряженности. Через это проходят все...  Что способствует осуществлению желаний? Стопроцентная, непоколебимая уверенность в своем...  Что вызывает тренды на фондовых и товарных рынках Объяснение теории грузового поезда Первые 17 лет моих рыночных исследований сводились к попыткам вычислить, когда этот... Не нашли то, что искали? Воспользуйтесь поиском гугл на сайте:
|