Topic 1.6.1 Finance
FINANCE
Discussion
- Who is in charge of dealing with financial matters in your …?
- Company
- Department
- Home
- Do you ever work with a budget at work or at home? How do you decide what to spend?
- Do you think it’s easier to manage your own money or someone else’s money? (e.g. your company’s money)? Why/Why not?
Vocabulary
Look at the list of ways of raising money to start a business. Discuss the pros and cons of each one.
- from a bank
- from a rich relative or friend
- from a business investor
- find a business partner
- use lots of credit cards
- save up the money
Activity 1
Activity 2
Discussion
- In your opinion, what is more important: increasing revenue or reducing expenses? Why?
- How do you differentiate between gross profits and net profits when assessing the success of a business?
- What types of assets do you consider most important in your personal financial situation?
- What categories do you include in your personal budget, and why are they important to you?
- In your opinion, how important is it to review your expenses regularly?
Reading and Listening
Listen and/or read the news report
https://1drv.ms/v/s!AvA7o-_Pc563iowguRo4w7fgo79blA
News report: Tech Company Reports Mixed Financial Results for the Year
In its annual financial report, a well-known tech company announced mixed results for the fiscal year. The company’s revenue grew by 15%, driven by strong sales in its software division. Despite this, the company’s gross profit only saw a slight increase due to rising production costs.
After accounting for higher operating expenses, including marketing and employee salaries, the company’s net profit was lower than expected. Some analysts expressed concern, noting that without better control of costs, the company may face potential loss in the next quarter.
One major challenge highlighted was the company’s negative cash flow for the third consecutive month. Although revenue is strong, the company has been struggling to maintain a positive cash balance. Management assured investors that the business is working on improving its financial health by tightening its budget and focusing on cutting unnecessary costs.
On the balance sheet, the company reported a stable position with a solid amount of assets. However, growing liabilities in the form of loans and debts are raising concerns about the company’s ability to meet future obligations.
True or False
Financial Report Reading Activity
Instructions:
Below is a simplified income statement for a fictional company, ABC Corp. After reading the report, answer the comprehension questions.
ABC Corp. Income Statement
For the period ending June 30, 2024
Item | Amount (USD) |
Revenue (Sales) | $500,000 |
Cost of Goods Sold (COGS) | $200,000 |
Gross Profit | $300,000 |
Operating Expenses | |
– Salaries | $80,000 |
– Rent | $50,000 |
– Utilities | $10,000 |
– Marketing | $30,000 |
Total Operating Expenses | $170,000 |
Operating Profit | $130,000 |
Other Expenses | |
– Interest Expense | $10,000 |
Net Profit | $120,000 |
Comprehension Questions:
Discussion questions
- Do you prefer saving money or spending on things that make life more enjoyable? Why?
- How do you decide what to spend on versus what to save for?
- Have you ever set a financial goal, like saving for a big purchase or vacation? How did you manage to achieve it?
- What’s the best financial advice you’ve ever received?
- Do you think it’s important to have a budget, or do you prefer to manage your finances more flexibly?
- How do you feel about credit cards? Do you use them often, or do you try to avoid debt?
- What do you think is the best way to invest money—real estate, stocks, or something else?
- Have you ever made an impulse purchase that you later regretted? How do you avoid that happening again?
- Do you think financial education should be taught in schools? How did you learn to manage your money?
- What’s something you think people waste too much money on?
- How do you balance enjoying life now with saving for the future?
- What’s your opinion on owning versus renting a home?
Role play
Divide into pairs:
- One student will play the role of the CFO (Chief Financial Officer).
- The other student will play the role of a department manager (e.g., marketing, production, or sales).
Scenario:
- The CFO presents the company’s financial situation to the manager.
- The manager asks the CFO questions about the company’s performance, budget, and any concerns regarding profits or expenses.
CFO’s Role: Begin by giving an update on the company’s finances:
- Mention revenue (“Our revenue has increased by 10% this quarter.”)
- Discuss expenses (“We’ve seen higher expenses in marketing.”)
- Explain the profit or loss (“We have a net profit of $120,000.”)
Manager’s Role: Ask questions about the financial situation:
- “Why did expenses increase?”
- “Can we invest more in marketing?”
- “How can we improve our net profit?”
Useful financial phrases:
- “We need to cut costs in certain areas.”
- “Revenue is up, but expenses have also risen.”
- “We are currently over budget.”
- “Can we reduce expenses in another department?”
- “What is our cash flow situation?”
- “How can we improve profitability in the next quarter?”
Homework
Current Events: Finance in the News
Task: Find a recent news article about a financial topic, such as a major company’s earnings report, stock market trends, or a new tax law. Write a summary and discuss how it could impact individuals or businesses.
Financial Vocabulary Review
Task: Look at these key financial terms.
Profit Margin Return on Investment (ROI) Equity Working Capital Depreciation
Dividend Liquidity Leverage Amortization Balance Sheet Capital
Define each term in your own words and provide a real-world example of its use.