Finance of organisations
Department of Social Sciences, SWPS University
June 22, 2026
Present Simple → Past Simple
Present Continuous → Past Continuous
Present Perfect → Past Perfect
Past Simple → Past Perfect
Future Simple (will + verb) → Conditional (would + verb)
Additional tense shifts
First person (I/my/me/we/our/us) → second or third person
Second person (you/your/yours) → third person
Context matters:
Possessive adjectives also change accordingly:
Adjust time expressions to match the new reporting context:
Yesterday → The day before / the previous day
Tomorrow → The next day / the following day
Next week/month/year → The following week/month/year
Last week/month/year → The previous week/month/year, The week/month/year before
Now → Then
This → That
Here → There
Specific dates:
Flexibility: There may be some flexibility in reported speech if the exact time is not critical.
Ago → Before
This morning/evening → That morning/evening
We use reporting verbs to introduce and frame reported speech. The verb you choose should reflect the nature of the original communication.
General reporting:
Emphasising opinion:
Implying uncertainty:
Conveying agreement/disagreement:
Formal communication:
Directing or requesting:
Persuasion and negotiation:
When the original statement is still true or relevant:
Reporting questions:
Reporting commands and requests:
Reporting conditional sentences:
Incorrect backshifting of modal verbs:
Confusing direct and indirect speech punctuation:
Inconsistent pronoun shifts:
Forgetting to backshift in complex sentences:
Using inappropriate reporting verbs:
The company’s accountant prepared a detailed ………………… outlining sales, costs, and net income for the quarter.
The company’s accountant prepared a detailed income statement outlining sales, costs, and net income for the quarter.
Income statement: A financial document that summarises a company’s revenues, costs, and expenses over a specific period. It shows whether the company made a profit or loss, revealing its financial performance. Also known as a profit and loss statement (P&L).
Before investing in a new venture, analysts used a ………………… model to estimate the potential value.
Before investing in a new venture, analysts used a discounted cash flow model to estimate the potential value.
Discounted cash flow: A valuation method that estimates an investment’s value based on expected future cash flows. It calculates the present value of these cash flows by applying a discount rate that accounts for time value of money and risk.
Long-term loans and outstanding accounts payable are both examples of ………………….
Long-term loans and outstanding accounts payable are both examples of liabilities.
Liabilities: Financial obligations that a company owes to outside parties, such as lenders, suppliers, or tax authorities. They include both short-term debts (accounts payable) and long-term commitments (loans) and are reported on the balance sheet.
Investors looking for regular income might be interested in purchasing a ………………….
Investors looking for regular income might be interested in purchasing a bond.
Bond: A debt security issued by governments, municipalities, or corporations to raise capital. Investors lend money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity. Bonds appeal to income-focused investors due to their predictable payments.
The ………………… tracks sources and uses of cash from operating, investing, and financing activities.
The cash flow statement tracks sources and uses of cash from operating, investing, and financing activities.
Cash flow statement: A financial statement showing cash inflows and outflows during a specific period. It categorises cash movements into operating, investing, and financing activities. This statement reveals how a company generates and uses its cash, crucial for assessing liquidity and financial health.
When a company buys new manufacturing equipment, the cost is gradually allocated over time through ………………….
When a company buys new manufacturing equipment, the cost is gradually allocated over time through depreciation.
Depreciation: An accounting method that allocates the cost of a tangible asset over its useful life. It spreads the cost over multiple periods rather than expensing it all at once, reflecting the asset’s gradual reduction in value and matching expenses with the revenues it generates.
A company’s patents and trademarks would be considered intangible ………………….
A company’s patents and trademarks would be considered intangible assets.
Assets: Resources owned or controlled by a company that provide future economic benefits. They can be tangible (physical items like equipment) or intangible (non-physical items like patents). Assets appear on the balance sheet and represent resources that generate revenue and profits.
………………… ratios help assess a company’s ability to quickly convert assets into cash.
Liquidity ratios help assess a company’s ability to quickly convert assets into cash.
Liquidity ratios: Financial metrics that measure a company’s ability to pay off short-term debts as they come due. Common examples include the current ratio and quick ratio. These help investors evaluate whether a company has sufficient cash or easily convertible assets to cover immediate obligations.
The ………………… provides potential investors with a picture of the company’s financial health at a particular moment.
The balance sheet provides potential investors with a picture of the company’s financial health at a particular moment.
Balance sheet: A financial statement showing a company’s financial position at a specific point in time. It follows the equation: Assets = Liabilities + Equity. The balance sheet lists what a company owns, what it owes, and the residual value belonging to shareholders. The two sides must always balance.
Ongoing costs like salaries, rent, and utilities are classified as ………………….
Ongoing costs like salaries, rent, and utilities are classified as expenses.
Expenses: Costs incurred by a business in its operations to generate revenue. Unlike assets, expenses represent resources consumed. They include operating expenses (like rent and salaries) necessary for day-to-day functions. Expenses appear on the income statement and are subtracted from revenue to calculate profit.
When a company’s ………………… exceed its current liabilities, it has positive working capital.
When a company’s assets exceed its current liabilities, it has positive working capital.
Working capital: The difference between a company’s current assets (cash, inventory, receivables) and current liabilities (payables, short-term debt). Positive working capital shows a company can cover short-term obligations, while negative working capital may signal liquidity problems. Good management balances operational needs with efficient use of resources.
Determining the fair market value of a business is the process of ………………….
Determining the fair market value of a business is the process of valuation.
Valuation: The process of determining the worth of a company, asset, or investment. Methods include discounted cash flow analysis, comparable company analysis, and asset-based approaches. It’s essential for investment decisions, mergers, acquisitions, and financial reporting, aiming to establish fair value based on financial metrics and risk factors.
Companies can raise funds for expansion by issuing new ………………… in the capital markets.
Companies can raise funds for expansion by issuing new stock in the capital markets.
Stock: Units of ownership in a company that represent a claim on part of its assets and earnings. When a company issues stock, it sells ownership shares to investors in exchange for capital. Shareholders may benefit from price appreciation and dividends. This is a primary way companies raise funds for expansion or other needs.
The total sales a company generates before any deductions are considered its ………………….
The total sales a company generates before any deductions are considered its revenue.
Revenue: The total amount of money generated by a company through its business activities, typically from the sale of goods or services. Often called the “top line” because it appears at the top of the income statement, revenue is the gross income before any expenses or deductions. It indicates a company’s market demand and operational scale.
………………… ratios are essential for investors to gauge a company’s efficiency in generating profits.
Profitability ratios are essential for investors to gauge a company’s efficiency in generating profits.
Profitability ratios: Financial metrics that evaluate a company’s ability to generate earnings relative to its revenue, costs, assets, or equity. Examples include profit margins, return on assets (ROA), and return on equity (ROE). These show how efficiently a company converts resources into profits, helping assess viability and compare performance across companies.
The risk-to-equity ratio is an example of a ………………… ratio, indicating the company’s long-term debt management.
The risk-to-equity ratio is an example of a solvency ratio, indicating the company’s long-term debt management.
Solvency ratios: Financial metrics that assess a company’s ability to meet long-term debt obligations. Unlike liquidity ratios, these examine the relationship between debt, assets, and equity to evaluate long-term financial stability. Examples include debt-to-equity ratio and interest coverage ratio. They help determine if a company has excessive debt.
The residual value that would remain for owners after all debts are paid is known as ………………….
The residual value that would remain for owners after all debts are paid is known as equity.
Equity: The ownership interest in a company, represented by the residual value of assets after deducting liabilities. For corporations, it’s often divided into shares of stock. Equity appears on the balance sheet and includes share capital and retained earnings. It represents the net worth of a business from an accounting perspective.
The potential for unexpected losses due to market fluctuations is an example of financial ………………….
The potential for unexpected losses due to market fluctuations is an example of financial risk.
Risk: The uncertainty or potential for loss associated with an investment or business decision. It represents the possibility that actual returns will differ from expected returns. Types include market risk, credit risk, liquidity risk, and operational risk. Managing risk involves identifying, assessing, and prioritising threats to minimise potential impacts.
The cost of a patent is spread over its useful life through a process called ………………….
The cost of a patent is spread over its useful life through a process called amortisation.
Amortisation: An accounting technique that gradually reduces the value of an intangible asset over its useful life. Similar to depreciation (for tangible assets), it allocates the cost of assets like patents, copyrights, and trademarks across multiple periods. This matches expenses with the revenues these assets generate over time.
Companies often issue ………………… to finance long-term projects or for expansion.
Companies often issue bonds to finance long-term projects or for expansion.
Bonds: Debt securities where investors lend money to an entity for a defined period at a fixed or variable interest rate. Issuers promise to pay periodic interest and return the principal at maturity. Companies use bonds to raise capital without diluting ownership, as bondholders are creditors, not owners. They typically offer lower returns than stocks but with reduced risk.
“Acme has been investing heavily in its new product line.”
She said that Acme had been investing heavily in its new product line.
Changes:
“We will see a significant impact on revenue in the next quarter.”
They stated that they would see a significant impact on revenue in the following quarter.
Changes:
“The CFO was explaining their debt management strategy.”
She reported that the CFO had been explaining their debt management strategy.
Changes:
“By this time next year, they might have entered two new markets.”
The analyst predicted that by that time the following year, they might have entered two new markets.
Changes:
“Analysts had predicted a drop in share price, but it rebounded quickly.”
She mentioned that analysts had predicted a drop in share price, but it had rebounded quickly.
Changes:
“The acquisition was a strategic move to expand their technology portfolio.”
The director explained that the acquisition had been a strategic move to expand their technology portfolio.
Changes:
“If sales projections hold, they should exceed last year’s profit.”
The manager said that if sales projections held, they would exceed the previous year’s profit.
Changes:
“There were rumours they were considering a stock split.”
He stated that there had been rumours they had been considering a stock split.
Changes:
“The CEO emphasised the importance of innovation during the conference call.”
The report indicated that the CEO had emphasised the importance of innovation during the conference call.
Changes:
“We’re expecting an announcement about their new partnership soon.”
They said that they were expecting an announcement about their new partnership soon.
Changes:
“They wouldn’t have achieved this growth without consistent research and development investment.”
The finance director argued that they wouldn’t have achieved that growth without consistent research and development investment.
Changes:
“Implementing this new accounting software has streamlined their reporting process.”
The accountant claimed that implementing that new accounting software had streamlined their reporting process.
Changes:
“The board is likely to approve the budget increase for marketing.”
She informed us that the board was likely to approve the budget increase for marketing.
Changes:
“They’ve always prioritised maintaining healthy cash reserves.”
The financial analyst noted that they had always prioritised maintaining healthy cash reserves.
Changes:
“I wish they would release more detailed financial projections.”
The investor expressed that she wished they would release more detailed financial projections.
Changes:
“Our financial performance today is stronger than ever before.”
The CEO announced that their financial performance that day was stronger than ever before.
Changes:
“The quarterly report shows a 15% increase in revenue compared to last year.”
The finance team reported that the quarterly report showed a 15% increase in revenue compared to the previous year.
Changes:
“I am confident we can meet our financial targets by December.”
The director stated that she was confident they could meet their financial targets by December.
Changes:
“You must submit your expense reports by tomorrow to receive reimbursement.”
The manager instructed that they must submit their expense reports by the next day to receive reimbursement.
Changes:
“My team and I have been analysing the market trends since January.”
He explained that his team and he had been analysing the market trends since January.
Changes:
English for Professional Purposes