How_Money_Works_-_The_Facts_Visually_Explained
38 39 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Corporate accounting Negative cash flow Less cash is flowing into the business th ...
L o w g e ar in g Equity finance (shares) Gearing ratio and risk Capital gearing is the balance between the capital a company ow ...
40 41 L o w g e ar in g PROFIT-MAKING AND FINANCIAL INSTITUTIONS Corporate accounting ❯❯Interest cover ratio An alternative meth ...
Business expansion Some companies, for example those in air travel, car manufacturing, or house building, tend to have higher le ...
42 43 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Corporate accounting GETTING THE BALANCE RIGHT $ A company that borrows money as ...
Financial reporting How it works There are legal requirements around financial reporting to ensure that a company gives a full a ...
44 45 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Corporate accounting Fixed assets Intangible assets 0 0 Tangible assets 2 ,16 7.1 ...
A financial instrument is something that has value and can be traded. This might be cash or currency, shares, assets, or debts a ...
46 47 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial instruments Insurance An insurance policy involves a company or individ ...
How it works Shareholders are investors who buy the shares a company creates, and who therefore own a part of the company. When ...
48 49 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial instruments After the IPO allocations, the company makes the shares ava ...
Current yield The interest rate the bond is paying expressed as a percentage of its market value. Year 1 yield = $100 The market ...
50 51 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial instruments Year 2 yield = 8.33% At $1,200, the interest remains the sa ...
A US-based airline company reviews its stock levels and decides that it will need to buy jet fuel for its fleet of planes in thr ...
52 53 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial instruments An investor notices a company’s share price going up and bu ...
Financial markets The flow of money around the world is essential for businesses to operate and grow. Stock markets are places w ...
54 55 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial markets New York, US The New York Stock Exchange (NYSE) is the largest ...
The money market Who uses the money market The primary function of the money market is for banks and other investors with liquid ...
56 57 PROFIT-MAKING AND FINANCIAL INSTITUTIONS Financial markets WHAT IS TRADED ON THE MONEY MARKET? COMPANIES A company that ha ...
Forex profit and loss A trader wants to sell some UK pound sterling (GBP) and buy euros (EUR) because they think that the value ...
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