This can be one of the most cost efficient ways for small or medium-sized businesses to get assets to help them grow. So make sure your clients are aware of the choices available 

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This can be one of the most cost efficient ways for small or medium-sized businesses to get assets to help them grow. So make sure your clients are aware of the choices available

Every year it's estimated that almost £27bn is spent by businesses on assets - such as machinery, tools, cars, vans or IT equipment - 27% of which is spent by companies with a turnover of less than £1m.

"All businesses need assets to operate and grow, as well as working capital. This is where asset finance can help," says Marc Dryden, Director, Network Sales, Lombard. "We view asset finance as a source of credit that preserves working capital and eases cashflow."

Growing businesses need finance that doesn't eat into their cash reserves, that's quantifiable and tax efficient. The standard options are buy, borrow, or lease and they all have their own pros and cons:

• Buying outright means capital allowance can be claimed, but it eats into working capital, plus there are the upkeep costs.

• Leasing, which usually just applies to tangible assets such as cars, plant and machinery and IT equipment, spreads costs over a fixed period, but may require a deposit to be paid up front. However, you can claim capital allowances, the interest paid can be deducted from taxable profits as a trading expense and upkeep of the asset is handled by the leasing firm.

• Borrowing works like leasing, but applies to any form of asset, including property, although upkeep is down to the borrower. It also isn't necessarily limited to assets. Take the Flexible Business Loan from NatWest, for example, which can finance anything from new equipment to taking on more staff. It can also offer more flexibility with regards to repayment options than other finance sources, such as repayment holidays, the ability to change repayment amounts and frequency of repayments.

Tailored to the business

Asset finance is a hybrid of leasing and borrowing, and as with these options, costs can be spread. What's more, with some lenders repayments can be made to coincide with incoming revenue.

Asset finance also works at a fixed rate, the contracts can be suited to the business and the asset, and as it is independent, it does not require companies to open an account. In addition, the upkeep of the asset is performed by the asset company. Although businesses never own the assets, they can still reduce their tax bill by choosing a borrowing or leasing option, as some or all of the cost is deductible as a business expense.

As the asset is handed back once the contract ends, asset financing usually involves lower deposits and monthly payments than loans or hire purchase, there are no resale problems and if the asset is used for business, between 50% and 100% of the VAT paid on rentals can be claimed back.

Businesses can also take advantage of the asset finance company's buying power and its subsequent service and maintenance. So the monthly price a company pays with asset finance should be lower than anything offered elsewhere.

Broad coverage

Any tangible asset with a readily available resale market is ideal for asset finance, such as vehicles, IT equipment, construction equipment and marine products. Vehicles is the biggest sector, taking £19bn of the £27bn of asset finance provided last year, and third-party finance was used for almost 50% of all new car registrations in 2005.

A traditional criticism of asset finance was that it was only for established companies borrowing large sums. This is no longer the case, according to Dryden. "Every client is suitable, but to make it viable, we look for a capital expenditure of around £15-20,000," he says.

Asset finance is different from a bank loan or an overdraft where the loan is unsecured. The security is the asset. "If we can identify it we are happy to fund it, so it shouldn't matter how old the company is," says Dryden. "We take each case on its own merits and tailor the facility to suit."

Lombard differs from other asset finance companies in a few notable ways. "We can put a relationship manager with a customer anywhere in the UK, and will try to meet face to face rather than talk on the phone, which is unique to us," explains Dryden.

This also works well for advisors and brokers. "We can make contact with a client almost immediately," says Dryden. This immediacy also applies to the speed at which a finance application is dealt with. Lombard would hope to get payment approved within 24 hours, and could get finance available in a similar time frame depending on the company and the amount required.


asset financing - финансирование активов: привлечение кредитов для оплаты приобретения тех или иных активов или высвобождения средств, вложенных в данные активы; обычно такие кредиты обеспечены теми же активами, для финансирования которых они привлечены (напр., финансирование под дебиторскую задолженность, финансирование под обеспечение товарно-материальными запасами, лизинг, покупка в рассрочку и т. д.)

leasing - лизинг, долгосрочная аренда оборудования




1) Балансовый отчет по структуре обычно представляет собой таблицу, на левой стороне которой указываются активы, на правой — собственный капитал и обязательства; активы и обязательства компании показываются в балансе с подразделением на долгосрочные и краткосрочные.

2) К основным активам относятся материальные, такие как оборудование, компьютеры, здания, земля, которые фирма приобретает для длительного пользования, и нематериальные.

3) Значение неосязаемых активов, таких как деловая репутация, торговая марка, нельзя недооценивать.

4) Собственный капитал рассчитывается как разница между совокупными активами предприятия и его обязательствами (пассивами).

5) В Великобритании термин ‘depreciation’ употребляется только по отношению к материальным активам, а для обозначения амортизации нематериальных активов используется термин ‘amortization’.

6) Балансовый отчет компании может содержать резервы по сомнительным долгам, а также резервы предстоящих расходов и платежей.




Along with the balance sheet, companies generally include two more financial statements in their annual reports.

The profit and loss account (Br.E) or income statement (Am.E) shows earnings or income and expenditure. It usually gives figures for total sales or turnover, and costs, expenses and overheads. In theory, if a company makes more money than it spends, it makes a profit. If not, it makes a loss. But it’s possible for a company to show a profit for a particular period because of the way it presents its activities under the accounting standards or accounting rules of one country, and a loss under the rules of another.

A pre-tax profit or a pre-tax loss is one before tax is calculated.

The final figure for profit or loss is what people call informally the bottom line. This is what they really worry about! The bottom line also means the final result or the most important aspect of something.

Below is an example of a consolidated profit and loss account according to international accounting standards (IAS) of Nokia:

Financial year ended December 31 Notes 2006 EURm 2005 EURm 2004 EURm
Net sales   34 191 29 371
Cost of sales   -27 742 -22 209 -18179
Gross profit   13 379
Research and development expenses   -3 897 -3 825 -3 776
Selling and marketing expenses -3 314 -2 961 -2 564
Administrative and general expenses   -666 -609 -611
Other income
Other expenses 7,8 -536 -233 -162
Amortization of goodwill _ - - 96
Operating profit 2-10 5 488 4 639 4 326
Share of results of associated companies 15,33 -26
Financial income and expenses
Profit before tax   5 723 4 971 4 705
Tax -1357 -1281 -1446
Profit before minority interests   4 366 3 690 3 259
Minority interests   -60 -74 -67
Profit attributable to equity_holders_of the parent   4 306 3 616 3 192
Earnings per share (for profit attributable to the equity holders of the parent) 2006 EUR 2005 EUR 2004 EUR
Basic   1.06 0.83 0.69
Diluted   1.05 0.83 0.69
Average number of shares (1000 shares)
Basic   4 062 833 4 365 547 4 593 196
Diluted   4 086 529 4 371239 4 600 337

If a company is making a loss, commentators may say that it is in the red. They may also use expressions with red ink, saying, for example, that a company is bleeding red ink or haemorrhaging red ink. The phrase "in the red" is used widely to refer to companies that have not been profitable within their last accounting period. This term is derived from the color of ink used by accountants to enter a negative figure on a company's financial statements. The phrase "in the black" is widely used to refer to the condition of companies that have been profitable in their last accounting period.

The third financial statement has various names, including the funds flow statement, source and application of funds statement (Br.E), cash flow statement and the statement of changes in financial position (Am.E). This shows the flow of cash in and out of the business between balance sheet dates.

Whereas the profit and loss account concentrates on whether a profit or loss has been made and a balance sheet shows the current worth of the business, a cash flow statement concentrates on cash.

A cash flow statement records the cash received by a business during the year and the flows of cash out. It therefore indicates where the firm’s cash funds have come from and how they have been used.

By concentrating on cash – or liquidity – these statements help managers realize why a profitable business might be running out of cash. Perhaps substantial capital investment has been undertaken, or goods have been sold but creditors are being given much longer to pay. These accounts will also explain why a loss-making business might be ‘cash rich’. Perhaps a loan has been taken out, creditors have paid back more quickly than usual or a new capital injection from investors has been made.

Cash flow can be used as an indication of a company's financial strength. A business with cash flow difficulties may ask its bank for an overdraft, which isan instant extension of credit from a lending institution. Their account at the bank is then in the red. This is a form of financingfrom the bank (and an expensive one), and the business’s receivables are security for this financing.


profit and loss account (Br.E)income statement (Am.E) - отчет о прибылях и убытках, отчет о результатах хозяйственной деятельности
consolidated profit and loss account - консолидированный (сводный) отчет о прибылях и убытках, (показывает результаты хозяйственной деятельности группы компаний как единого целого)
make a profit make a loss - получать прибыль - нести убытки
accounting standards accounting rules - стандарты (бухгалтерского) учета
International Accounting Standards (IAS) - Международные стандарты бухгалтерского учета (финансовой отчетности); МСФО
pre-tax profit pre-tax loss - прибыль до вычета налогов - убыток до налогообложения (до вычета налогов)
bottom line - нижняя черта, итог, баланс доходов и расходов (прибылей и убытков) (итоговая строка в финансовой отчетности, показывающая чистые прибыли и убытки); чистая прибыль (размер прибыли после налогообложения); окончательный результат; важный (основной, главный) фактор
in the red - с убытком; выражение, используемое для обозначения убыточных операций, т. к. раньше в бухгалтерских книгах убытки записывались красными чернилами
red ink - убытки, потери; отрицательное сальдо (баланса, финансового отчета)
bleeding red ink haemorrhaging red ink - истекающий кровью, обессиленный; стоящий на грани банкротства
in the black - без убытков, с положительным сальдо, с прибылью: выражение, используемое для обозначения безубыточных операций
cash flow statement funds flow statement source and application of funds statement (Br.E) statement of changes in financial position (Am.E) - oтчет о движении денежных средств, отчет о денежных потоках, отчет об источниках и использовании фондов
capital investment - капиталовложения, инвестиции в основной капитал
overdraft - превышение кредита (в банке); овердрафт; задолженность банку: сумма сверх остатка на текущем счете в банке, на которую может выписываться чек
security - обеспеченность (напр. кредита), залог


1) What financial statements are generally included in companies annual reports?

2) What information is given in the profit and loss account?

3) What is the bottom line?

4) When are the expressions ‘bleeding red ink’ or ‘haemorrhaging red ink’ used?

5) In what connection are the phrases ‘in the red’/’in the black’ used?

6) What does cash flow statement show?

7) In what way does the cash flow statement differ from the income statement?

8) What is overdraft?



Ford has now lost money in North America in seven of the past eight quarters. The region had a pretax loss of $1.6 billion in 2005.

Automotive units in South America, Ford of Europe and Asia- Pacific reported profits. South America's $95 million pretax profit widened from the year-ago $88 million pretax profit; Europe's pretax profit expanded to $105 million from $66 million; and Asia Pacific's pretax profit fell to $4 million from $36 million in 2005's second quarter.

The bottom line is the first thing many investors look at to gauge a company's profitability.

The NHS in England will be £750m in the red by the end of the financial year on 31 March, a BBC survey suggests.

What does a company bleeding red ink in the cutthroat PC industry do with spare cash that it nets from laying off its employees and outsourcing the jobs to India? HP goes shopping!

‘ATI is back in the black’. ATI returned to profitability during the three months to 30 November 2005, the first quarter of the graphics company's 2006 fiscal year.


Overdrafts are generally meant to cover short-term financing requirements - they are not generally meant to provide a permanent source of finance



63. Strong Fundamentals and Fundamental Analysis

We hear the word "fundamentals" on an almost daily basis. On CNBC' s "Squawk Box", for instance, company CEOs come out and proclaim that their companies have good fundamentals. Analysts and fund managers are always talking about how this or that stock has strong fundamentals. In turn, there are some traders who proclaim that fundamentals don't actually matter and investors should rely on 'technical' merits instead. All this talk about fundamentals is confusing. What are they all talking about?

In the broadest terms, fundamental analysis involves looking at any data, besides the trading patterns of the stock itself, that can be expected to impact the price or perceived value of a stock. As the name implies, it means getting down to basics. Unlike its cousin technical analysis, which focuses only on the trading and price history of a stock, fundamental analysis focuses on creating a portrait of a company, identifying the intrinsic or fundamental value of its shares and buying or selling the stock based on that information.

Some of the indicators commonly used to assess company fundamentals include: cash flow; return on assets; conservative gearing; history of profit retention for funding future growth; and soundness of capital management for the maximizing of shareholder earnings and returns. Think of the stock market as a shopping mall: stocks are the items for sale in the retail outlets. Technical analysts will ignore the goods for sale. Instead, they will keep an eye on the crowds as a guide for what to buy. If they notice shoppers congregating inside a computer shop, our technical analysts will try to buy as many PCs as they can, betting that the growing demand will push PC prices higher.

Fundamental analysts have a more staid approach. Their sights are set solely on the products in the mall. Shoppers are dismissed as an unreliable, emotional herd with no inkling of the real value of the goods for sale. Our fundamental analysts move slowly through the stores seeking the best deals. Once the crowd moves on from the PCs, they will take a closer look at the ones that were passed over.

Fundamental analysts might take a stab at determining the scrap value of the PC stripped down to its hard disk, memory cards, monitor and keyboard. In the stock market, this is akin to calculating the book value or liquidation price of a company.

They will also take a very close look at the quality of the PC. Is it going to last, or will it break down within a year? The fundamental analysts will pore over the specifications, scrutinize the manufacturer's warranty and consult consumer reports. Similarly, equity analysts check a company's balance sheet for financial stability.

Then, the fundamental analysts might try to understand the performance of the PC in terms of, say, processing power, memory or image resolution. These are like the forecast earnings and dividends identified from a company's income statement.

Finally, the fundamental analysts will put together all the data and come up with an intrinsic value or value independent of the current sale price. If the sale price is less than the calculated intrinsic value, the fundamentalists will buy it. If not, they will either sell the PCs they already own or wait for prices to fall before buying another one.

Performing fundamental analysis can be a lot of hard work. But that is, arguably, the source of its appeal. By taking the trouble to dig into a company's financial statements and assess its future prospects, investors can learn enough to know when the stock price is wrong. Those investors able to spot the market's mistakes can make themselves money - a lot of it. At the same time, buying companies based on intrinsic, long-term value protects investors from the dangers of day-to-day market flux.

However, the fact that fundamental analysis shows that a stock is undervalued does not guarantee that it will trade at its intrinsic value any time soon. Things are not so simple. In reality, real share price behavior relentlessly calls into question almost every stock holding, and even the most independently minded investor can start doubting the merits of fundamental analysis. There is no magic formula for figuring out intrinsic value.

When the stock market is booming, it is easy for investors to fool themselves into thinking they have a knack for picking winners. But when the market falls and the outlook is uncertain, investors cannot rely on luck. They actually need to know what they're doing.

That said, there is much that the investor can do to learn about fundamentals. Investors who roll up their sleeves and tackle the terminology, tools and techniques of fundamental analysis will enjoy greater confidence in using financial information and, at the same time, will probably become better stock pickers. At the very least, investors will have a better idea of what is meant when someone recommends a stock on strong fundamentals.


fundamentals – основы; основные принципы; зд. факторы положения кампании, такие как: баланс, счет прибыли и убытков и т.д. Используются при анализе для прогнозирования курсов акций.

CNBC' s "Squawk Box" – утренняя программа деловых новостей канала CNBC (CША)

fundamental analysis - фундаментальный анализ (метод прогнозирования изменения цены, основанный на анализе текущей экономической ситуации; предусматривает изучение балансов, годовых отчетов, биржевой конъюнктуры и перспектив развития отраслей экономики)

technical analysis - технический анализ (прогнозирование движения цен исключительно на основе анализа графиков изменения цен и объемов торговли для выявления и предугадывания повторяемости)

trading pattern - характер торговли; динамика : долгосрочная тенденция движения цен товара или финансового инструмента

gearing - отношение заемного капитала к собственному капиталу; характеризует интенсивность использования заемных средств

intrinsic value – действительная, внутренняя стоимость: стоимость акции, рассчитанная исходя из приведенной стоимости ожидаемых денежных потоков по данной акции и ее оценочной рисковости, либо на основе внутренней стоимости компании

market flux – рыночные изменения



1) Отчет о прибылях и убытках показывает доходы компании, её расходы и разность между доходами и расходами.

2) Чистая прибыль компании, т. е. доход за вычетом всех расходов, называется нижней чертой или последним показателем в отчете о прибылях и убытках.

3) Отчет о движении денежных средств отражает источники поступления денежных средств и направления их расходования. Это помогает менеджерам понять, почему прибыльное предприятие может испытывать нехватку наличности.

4) Овердрафт - форма краткосрочного кредита, процентная ставка по нему подлежит согласованию.

5) При предоставлении кредита кредитор обычно требует обеспечения его займа




Unsuccessful companies may collapse, go out of business, or go bankrupt.

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, bankruptcy is initiated by the debtor.

The primary purpose of bankruptcy is to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.

In the United Kingdom, bankruptcy (in a strict legal sense) relates only to individuals and partnerships. Companies and other corporations enter into differently-named legal insolvency procedures: liquidation, administration (administration order and administrative receivership).

When a company or partnership gets into financial trouble an administrator or administrative receiver may be appointed.

An administrator's primary goal is to rescue the company as a going concern. If this isn't possible, the administrator will try to get a better result for the creditors than would be possible if the company was wound up.

If neither of these is possible, the administrator will sell the company's property to make at least a partial payment to one or more secured or preferential creditors, such as employees or the bank.

An administrative receiver is an insolvency practitioner who has control of the whole, or a substantial part, of the company's property and wide powers over the business.

The administrative receiver is mainly concerned with getting back the money owed to the secured creditor. The administrative receiver may sell the assets piecemeal, or sell the whole business as a going concern to pay off the secured creditor, and the costs of the receivership.

If a company cannot be rescued, it is wound up, with the receivers or administrators selling what they can to pay off the debts. A company in this situation goes into liquidation and is then in liquidation. The receivers or administrators are in this case liquidators of the company.

A company unable to pay its debts is insolvent.

An insolvent company that does not continue in some form ceases trading.

More informal expressions for going out of business include crash, fold, go bust, go under, and go to the wall.

When a lot of businesses in an industry go bust at the same time, commentators talk about a shake-out eliminating these weaker companies.

Sometimes the image of corporate wreckage is used; the state of the company is likened to a car or plane after a serious accident. Commentators talk about trying to salvage something from the wreck or wreckage in the same way that shipwrecks are salvaged for anything of value that remains.

Companies in financial difficulty are often described as sick, or ailing, a word used more in this context than to describe people who are ill.

Companies in trouble and needing outside help are also often referred to as lame ducks, likening them to birds with difficulty in walking.

Sometimes company doctors, people who specialize in this area, are brought in to turn round companies in difficulty and make them successful again. If they succeed in difficult circumstances, the resulting turnround or turnaround is often described as dramatic or remarkable.



go bankrupt/ collapse/ go out of business crash/ fold/ go bust/ go under/ go to the wall   - о б а н к р о т и т ь с я
bankruptcy - банкротство, несостоятельность
file for bankruptcy - заявлять о несостоятельности
insolvency -неплатежеспособность: неспособность выполнять денежные обязательства; в случаях отдельных индивидуумов это может привести к банкротству, а в случае компаний - к ликвидации; несостоятельность
insolvent - неплатежеспособный; несостоятельный
liquidation winding-up - ликвидация: официальное закрытие компании, удовлетворение требований кредиторов и распределение оставшихся активов между акционерами
go into liquidation - ликвидироваться; прекратить деятельность в связи с банкротством
company in liquidation - ликвидируемая компания
liquidator - ликвидатор: лицо, уполномоченное осуществить официальное прекращение деятельности компании
administrationin bankruptcy - управление конкурсной массой, конкурсное управление: организация продажи имущества должника посредством проведения аукционов или публичных торгов
administration order   - решение [постановление, приказ] о конкурсном управлении: приказ суда, согласно которому указанному лицу поручается осуществлять управление делами неплатежеспособного физического или юридического лица
administrative receivership - конкурсное управление; управление конкурсной массой: процесс, в ходе которого назначенное судом лицо осуществляет управление активами неплатежеспособного должника
administrator - администратор: лицо, назначенное судом для выправления дел компании на грани банкротства
administrative receiver - конкурсный управляющий, управляющий конкурсной массой
cease trading - прекратить деятельность компании
shake-out - «встряска»: существенное изменение в рыночных условиях (напр., возникновение избытка предложения, рецессия), в результате которого наиболее слабые участники рынка (спекулянты или торгующие в кредит) разоряются или несут потери
wreckage, wreck - крушение; гибель; катастрофа; авария; крах
salvage - спасать имущество
sick, ailing - ( о компании, об экономике) испытывающий серьёзные (финансовые) трудности (проблемы)
lame duck - "хромая утка" : компания в тяжелом (финансовом) положении; (полит. ам.): государственный деятель или крупный чиновник, чье влияние сведено к нулю в связи с предстоящим уходом с занимаемого поста в результате поражения на выборах или отставки
company doctor turnaround manager - специалист, консультант который вводится в правление компании для вывода компании из кризисной ситуации; антикризисный управляющий
turn around turn round - полностью изменить; изменить к лучшему; улучшить, исправить
turnaround turnround - благоприятный поворот (рыночной конъюнктуры, экономики в целом или дел компании (напр., поворот от убытков к прибыли); «разворот» компании: вывод компании из кризиса путем реструктуризации, сокращения расходов, выбора новой стратегии развития


1) What is bankruptcy? What is its purpose?

2) What insolvency procedures do companies go through?

3) What is an administrator’s primary goal?

4) What is an administrative receiver mainly concerned with?

5) What happens to a company when it cannot be rescued?

6) What expressions are used when we talk about companies going out of business?

7) What words are used when we describe companies in financial difficulty?

8) What situation is called turnaround?



Like a battlefield surgeon the turnaround manager must decide where to spend time. Will this company fail no matter what the manager does? Even if survival is a possibility will the investment of time and resources exceed the value to be created?

Once the manager is committed to the turnaround, the first step is to stop the negative cash flow. This will require some quick and decisive management action to stabilize the organization and deal with poor employee morale and to increase the margins and reduce the overhead costs. In these crisis situations, the successful turnaround manager must focus on short-term action plans to make the business healthy.

It is expected that the UK Government's liberalisation of the UK bankruptcy regime will increase the number of bankruptcy cases; initial Government statistics appear to bear this out. It remains to be seen whether the legislation will need reviewing if this remains the case.

As with many human diseases, early detection of turnaround situations is critical.

Administrators found that an immediate liquidation of Polly Peck would have produced a deficit for shareholders of $384 million.

In the US, a trustee is like a British receiver, except that he is there to get the company going again, not to wind it up.

Airlines throughout the globe are losing money heavily and many are facing bankruptcy, takeovers and collapse.

As Japan's 'bubble’ economy bursts, so thousands of companies are collapsing with it. Some 5,600

companies went bankrupt during the first seven months of this year.

Instead of allowing them to collapse, triggering a chain reaction - remember one small company going under can bring down up to a dozen in its wake - the government should extend a lifeline.


The banks had no alternative. If they had pulled the plug, Canary Wharf would have gone into liquidation and been sold off to the highest bidder and they would all have lost millions.



64. Bankruptcies reach another record

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