Business and Finance

I needed to help my friend to do his homework. And the book he uses seems so good for ones who are learning business English. Below is one of the lessons on that book.

Banks and businesses

Most businesses need to borrow money to finance (= pay for) investments (= things they need to buy in order to help the company, e.g. machines). The money they borrow from the bank is called a loan, and on this loan they have to pay interest, e.g. if you borrow $1’000 and the interest rate is 10%, then you have to pay back $1’000, plus $100 in interest.

Business and profit

One of the main aims/objectives (= the things that you hope to do/achieve) of a company is to make a profit (= earn/receive more money that it spends) (≠ make a loss). If a company does not make a profit or a loss, it breaks even.

Most companies are happy if they can break even in their first year of business.

Companies receive money from selling their products - this money is called the turnover. The money that they spend is called the expenditure (fml). They spend money on these things: raw materials (= materials in their natural state used to make something else, e.g. coal and oil are important raw materials used to make plastics); labour (= employees); overheads (= necessary costs for a company, e.g. rent for buildings, electricity, telephone)

Rise and fall

Business people often need to talk about the movement of sales, prices, interest rates, profit and loss, etc. Here are some of the words used to describe these trends (= movements):

rise / go up / increase

rise slowly (also gradually)

rise sharply

fall/go down ('decrease' is less common as a verb)

fall slowly

go down sharply

Note: rise, increase, and fall are also used as nouns: a slow rise in interest rates, a steady increase in sales, a sharp fall in profits, a dramatic (= sharp) rise in inflation. We can also use be up/down: prices are up by 10%; profits are down by $2m.

Business and the economy

In order to grow/expand (= get bigger) and thrive/prosper (= do well / be successful), many companies want or need the following:

low inflation, so price do not go up

low interest rates, so the company can borrow money without paying a lot of interest

economic and political stability (= things remain steady and stable and there are no sudden changes in the economic and political situation)

a healthy/strong economy (= in good condition), and not an economy in recession (= in a period of reduced and slow business activity)

tax cuts (= tax reductions / lower taxes), so they can keep more of their profit. This often depends on government expenditure, e.g. The government will not be able to reduce taxes if public expenditure continues to rise.