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Dance-Off Party

12 Dec

These are my amazing students! As part of our Business Negotiations class, I asked them to prepare a group dance. They had to work together and we voted on who had the best dance. There were some GREAT ideas here, and I was really proud of them. Make sure you watch the last dance!

 

New Corporate Governance Vocabulary

23 Sep

I’ve added new terms to the list of Business or Corporate Governance Vocabulary

Don’t forget, the Chinese translations come from the Chinese students rather than professional translators. While I believe they are accurate, you may want to consult professionals before using them for official documents. This is mainly intended to contribute to daily conversation between English speaking Companies and Chinese companies.

Abbreviations:

v. = Verb
n. = Noun
adj. = Adjective
adv. = Adverb

(c) All Rights Reserved. You are welcome to use this material. However, if you do end up using these definitions in your material (educational, informational, or professional), please include either a link to this webpage or the following reference: Blessing, Olivia. “Corporate Governance Vocabulary.” DeceptivelyBlonde.com. This is for two reasons: 1) I’d like to share the resource with others. 2) I created these definitions myself. Thanks!

Appoint (v.) ~

  1. To select a person or group of people for specific work or for an official job . 委任 –Wěi rèn
  2. To select a specific time or date for an event. 任命 – Rèn mìng

 

Assets (n.) ~ Anything valuable or of worth that belongs to the company. Found on the Balance Sheet. 资产 – Zīchǎn

Balance of Power (n.) ~ The issue of whether power or authority is equally shared among the people so that no one person or group is stronger than the others. 均势 – Jūnshì / 权力平衡 – Quánlì Pínghéng

Business Practices (n.) ~ The usual methods, procedures, systems, traditions, and rules used by a company in accomplishing its goals. 商业惯例 – Shāngyè guànlì

Chairman (n.) ~ The Chief Officer of a company, appointed as the head of the Board of Directors. Responsible for developing corporate policy and supervising  the Executives. 董事长 – Dǒng Shì Zhǎng

Contribute (v.) ~ To give something (time, money, goods, effort, thoughts, ideas) as part of helping a group accomplish something. (Example – My contribution to the project was the Powerpoint I did)贡献 – Gòngxiàn

Controls (n.) ~ Rules or Restrictions use to limit or regulate something. 管制- Guǎnzhì

Corporate Structure (n.) ~ The system or plan for organizing a corporation’s groups, committees, and people. 公司结构 – Gōngsī Jiégòu

Decide (v.) ~ To make a conclusion or final choice about something. 决定 – Juédìng

Decision (n.) ~ A conclusion or final choice about something. 决议 – Juéyì

Director (n.) ~ Member of the Board of Directors which monitors the Executive Staff, works with the Shareholders, and makes some of the most significant decisions about the company’s purpose, values, ethics, goals, major activities, and future. 董事 – Dǒngshì

Executive (n.) ~ The senior manager or officer in charge of a specific area of the company who is responsible for making and implementing the significant day-to-day decisions. 高管 – Gāo Guǎn

Financial (adj.) ~ Connected to or associated with money or finances. – Cái / 金融 – Jīn róng

Fiscal (adj.) ~ Connected to or associated with money or finances (usually in terms of the cash flow, assets, and liabilities of a company). 财政 – Cái Zhèng

Liabilities (n.) ~ All debts or financial obligations a company owes . Found on the Balance Sheet. 负债 – Fùzhài

Member (n.) ~ Someone who has fulfilled all the requirements and been accepted into the group. (Example – “I am a member of the Wēixìn Group for my class”)  会员 – Huìyuán

Membership (n.) ~ One’s position as part of a group. The fact that someone has fulfilled all the requirements and been accepted into a specific group. (Example – “I have a membership with the gym.”) 会籍 – Huì Jí / 会员资格 – Huìyuán Zīgé

Minimum (n.) ~ The lowest possible amount of something. 最低限度 – Zuìdī Xiàndù

Nomination (n.) ~ The official recommendation or suggestion that someone deserves a specific job. 提名 – Tímíng

Performance (n.) ~ The way someone does their work. When reviewed by others, performance is usually judged by its effectiveness and efficiency. (Example – Your performance was very good; you did the job quickly and correctly). 绩效 – Jīxiào

Relevant (adj.) ~ Directly linked to or important to the issue being considered (Example – Whether or not the product test is successful is relevant to whether we sell it this year or not). 相应 – Xiāng yìng

Remuneration (n.) ~ The payment or reward a person gets for doing their job. 报酬 – Bàochóu

Report (n.) ~ A detailed account or explanation (written or spoken) about the person, group, or company’s activities, work, situation, research, etc汇报 – Huìbào

Report (v.) ~ To give the report to the audience. 报告 – Bàogào

Review (v.) ~ To examine or look over something to make sure it is correct, complete, adequate, or that you understand it. 回顾 – Huígù 

Risk (n.) ~ Something that puts important or valuable items in danger of being destroyed, damaged, or lost. 风险 – Fēngxiǎn

Strategy (n.) ~ A plan or method of accomplishing something. 战略 – Zhànlüè

 

Photo above is not mine. All Rights go to Suzanne Dibble, on who’s website I found the photo.

Understanding Compound Interest

14 Jun

As always, this lesson is not intended to be professional advice. This is simply lesson material for ESL students in a Managerial Economics and Corporate Finance class. Posted here for their use or for helping other students.

Corporate Value (值)

Financial officers and Managers are extremely responsible for the monetary (货币) goings-on in their companies. As we said before, the Wealth Maximization Rule means that Financial and Corporate Managers are required to maximize (最大化) the profits (收益) for their investors (投资者). 

However, maximizing profits requires in-depth (深入)planning and micro-managing (微观) your funds today while considering (考虑) future profits as well.

There are two types of Value (值) that you should be aware of in Finance and Economics.

The first is called Present Value (现值) and is the value today of something that will increase in value in the future. ExampleWhen we loan someone $1,000 at 10% interest, we know that our $1,000 loan will increase in value in the future. Present Value = PV.

The second is called Future Value (未来价值) and is the value that the item will have in the future. Future Value = FV.

Interest (利)

I’ll make another post later discussing the many ways to use Present and Future value in your company, but today I just wanted to talk about using them to calculate (计算) “Compound Interest” (复利).  

Usually, when we loan money to someone or invest (投资) our money in something, we do so on the condition that we receive back more money than we put in.  Our corporation is not a charity (慈善机构), we don’t loan you things for free!  The original money we invest is called the Principal (本息).  The extra money we get on top is called the Interest (利).  

Example ~ Company A (a large global corporation) invests $100,000 in a small new business called Company B.  Company B has 10 years to pay it back. But Company A doesn’t do this for free ~ they want to maximize their profits too. That means they have to make some money on this contract (合同).  So they ask Company B to pay an additional 7% per year.   

$100,000 = Principal
7% = Interest

COMPOUND INTEREST (复利)

Problem! ~ 7% of what?  
Answer! ~ It depends:)   It depends on how Company A decides to count it.

There are two separate mathematical formulas (数学公式) you can use to figure out the Interest.  

The first one is called Simple Interest (单利) and I’ve already looked at it before.

The second method is called Compound Interest (复利). Compound Interest says that each payment period, Company B is going to pay an additional 7% of the currently owed principal! Lenders and Investors really like compound interest a lot better than simple interest.  

For example: I borrow $1000 due in two years.  My interest rate is 10%.  

If I use Simple Interest:  Year 1, I owe $1000 + 10% interest = $1100.  Year 2, I owe $1100 + (10% of $1000) = $1200. 🙂 

If I use Compound Interest: Year 1, I owe $1000 + 10% interest = $1100.  Year 2, I owe $1100 + (10% of $1100) = $1210

The formula for Compound Interest is:

I = Interest
P = Present Value
R = Interest Rate
T = Number of Years Involved
N = Number of Times a Year

Example 

Company A (a large global corporation) invests $100,000 in a small new business called Company B.  Company B has 10 years to pay it back. The interest rate is 7% compounded  bi-annually.   What is the Total Interest (利) you will pay over 10 Years?

Calculating FUTURE VALUE and PRESENT VALUE using COMPOUND INTEREST

The total interest is of course important to both Company A and Company B, there are two other important numbers that the financial managers of Company A want to know–the Present Value of their money and the Future Value of their money.  

Future Value

FV = Future Value (how much money you will make in total)
PV = Present Value

R = Interest Rate
T = Number of years involved
N = Times per Year

Using our example above with Company A & B, the Future Value is calculated like this:

That means Company A will make a total of $286,968.46 if they invest their $100,000 in Company B now. Over 10 years, their $100,000 will change into $386,968.46.:) We like this plan!

Present Value

Sometimes, for example with bonds (债券), we know the Future Value (how much money will be paid to us in the end). But we don’t know how much money has to be invested (Present Value) to get that future result.  So Present Value is calculated by the formula: 

PV = Present Value 
FV = Future Value

R = Interest Rate
T = Number of years involved
N = Number of Times per Year

Example: Mary Jane knows that in 4 years, she needs to have a total of $150,000 to pay her college tuition. She has an interest-generating account that gives her a 4% compound interest rate bi-annually on everything she puts in. How much money should she invest today (Present Value) in order to have $150,000 in 4 years?

That means that Mary Jane needs to put $101,336.67 in her bank account now in order to get $150,000 in the future. 

JPEG

KEY TERMS TO REMEMBER

  1. Value (值)
  2. Present Value (现值)
  3. Future Value (未来价值)
  4. Interest (利)
  5. Simple Interest (单利)
  6. Compound Interest (复利)
  7. Principal (本息)
  8. Monthly (每月一次)
  9. Weekly (每周)
  10. Annually (每年)
  11. Bi-Annually (一年两次)
  12. Quarterly (季刊)

FORMULAS TO REMEMBER

Compound Interest

Future Value

Present Value

Understanding Simple Interest

6 Jun

As always, this lesson is not intended to be professional advice. This is simply lesson material for ESL students in a Managerial Economics and Corporate Finance class. Posted here for their use or for helping other students.

Corporate Value (值)

Financial officers and Managers are extremely responsible for the monetary (货币) goings-on in their companies. As we said before, the Wealth Maximization Rule means that Financial and Corporate Managers are required to maximize (最大化) the profits (收益) for their investors (投资者). 

However, maximizing profits requires in-depth (深入)planning and micro-managing (微观) your funds today while considering (考虑) future profits as well.

There are two types of Value (值) that you should be aware of in Finance and Economics.

The first is called Present Value (现值) and is the value today of something that will increase in value in the future. ExampleWhen we loan someone $1,000 at 10% interest, we know that our $1,000 loan will increase in value in the future.  Present Value = PV.

The second is called Future Value (未来价值) and is the value that the item will have in the future. Future Value = FV.

Interest (利)

I’ll make another post later discussing the many ways to use Present and Future value in your company, but today I just wanted to talk about using them to calculate (计算) “Simple Interest” (单利).  

Usually, when we loan money to someone or invest (投资) our money in something, we do so on the condition that we receive back more money than we put in.  Our corporation is not a charity (慈善机构), we don’t loan you things for free!  The original money we invest is called the Principal (本息).  The extra money we get on top is called the Interest (利).  

Example ~ Company A (a large global corporation) invests $100,000 in a small new business called Company B.  Company B has 10 years to pay it back. But Company A doesn’t do this for free ~ they want to maximize their profits too. That means they have to make some money on this contract (合同).  So they ask Company B to pay an additional 7% per year.   

$100,000 = Principal
7% = Interest

SIMPLE INTEREST (单利)

Problem! ~ 7% of what?  
Answer! ~ It depends 🙂   It depends on how Company A decides to count it.

There are two separate mathematical formulas (数学公式) you can use to figure out the Interest.  The first one is called Simple Interest (单利). Simple Interest says that each payment period Company B is going to pay an additional 7% of the original principal ($100,000).  The formula for Simple Interest is:

I = Interest
P = Present Value
R = Interest Rate
T = Number of Years Involved

Example

Company A (a large global corporation) invests $100,000 in a small new business called Company B.  Company B has 10 years to pay it back. The interest rate is 7% per year.   What is the Total Interest (利) you will pay over 10 Years?

Calculating FUTURE VALUE and PRESENT VALUE using SIMPLE INTEREST

The total interest is of course important to both Company A and Company B, there are two other important numbers that the financial managers of Company A want to know–the Present Value of their money and the Future Value of their money.  

Future Value

FV = Future Value (how much money you will make in total)
PV = Present Value

R = Interest Rate
T = Number of years involved

Using our example above with Company A & B, the Future Value is calculated like this:

That means Company A will make a total of $70,000 if they invest their $100,000 in Company B now. Over 10 years, their $100,000 will change into $170,000. 🙂 We like this plan!

Present Value

Sometimes, for example with bonds (债券), we know the Future Value (how much money will be paid to us in the end). But we don’t know how much money has to be invested (Present Value) to get that future result.  So Present Value is calculated by the formula: 

PV = Present Value 
PV = Future Value

R = Interest Rate
T = Number of years involved

Example: Mary Jane knows that in 4 years, she needs to have a total of $150,000 to pay her college tuition. She has an interest-generating account that gives her a 4% interest rate on everything she puts in. How much money should she invest today (Present Value) in order to have $150,000 in 4 years?

That means that Mary Jane needs to put $129,310.35 in her bank account now in order to get $150,000 in the future. 

JPEG

KEY TERMS TO REMEMBER

  1. Value (值)
  2. Present Value (现值)
  3. Future Value (未来价值)
  4. Interest (利)
  5. Simple Interest (单利)
  6. Principal (本息)

FORMULAS TO REMEMBER

Simple Interest

Future Value

Present Value

Corporate Finance – What is the Balance Sheet?

27 Apr

**As always, my work is designed with Chinese ESL student in mind. Please consider this when reading.

Corporate Finance has 3 main types of Financial Documents:

  • Balance Sheet ~ Value of the Company (How it is divided between Debt and Equity)
  • Income Statement ~ Specific Use of Assets and Liabilities
  • Cash Flow Statement ~ How Cash is Handled from the moment it enters the company until it leaves.

Balance Sheet

We all know that Revenue has to be bigger than Costs/Expenses if the company is going to be successful (Revenue – Cost = Profit). And if you are a financial manager, your legal responsibility is to increase profits for the Shareholders (earn a profit). 

However, for years all that companies worked with were Income Statements. Unfortunately many of them quickly realized they could hide money away in methods not put on the Income Statement. Not only that, but the Income Statement didn’t really outline all of the important factors used in looking at Profit.  So now we have the Balance Sheet -a financial document intended to make everything more honest and clear.

The Balance Sheet summarizes the Assets, Liabilities, and Equity at a certain date.

  •    It is an overall summary of what the company looks like. 
  •   It explains to the Business how well the company is functioning
  •   It explains to Owners how well their Equity is doing
  •   In general, it tells us if the company will be profitable or not.

For example, how much is the company worth July 2016?

General Equation (Assets = Equity – Liabilities)

  • Assets = Everything owned by the company.  Obtained by either creating capital or obtaining debts (borrowing money)
    • Current Assets –Assets that will be turned into cash within 1 Year
    • Long-Term (Fixed) Assets – Assets that will be turned into cash within more than 1 Year
    • Intangible Assets – Assets that you cannot see, but that still exist
  • Liabilities = All the debt the company has to pay
    • Current Liabilities—Debts to be paid this year.
    • Long-Term Liabilities—Debts to be paid in more than 1 year.
  • Equity (Net Worth) = Assets – Liabilities (The Company’s Value for the owners)
    • Owner’s Equity (Owner’s Investment – Owner’s Withdrawals from the Company +/- Net Income/Loss)
    • Retained Earnings
    • Net Profits or Losses

 

The Balance Sheet will be organized according to the “Liquidity” of the category (meaning how quickly that category of assets, liabilities, or equity can be changed into cash). The farther down the list we go, the less liquid the categories become.

EXAMPLE

Assets

Calculating the Value of a Company

25 Apr

As always, this lesson is not intended to be professional advice. This is simply my lesson material for ESL students in a Managerial Economics class. Posted here for their use or for helping other Economics students.

Finding the Value of the Firm

We measure the success of a financial manager (how well they maximize profits) by finding the overall Value of the Firm (公司的价值).  

Value of the Firm = Value of the Company = Present Value (现值)= How much money ($$/¥/₩) the company would be worth if you tried to sell it today (多少钱该公司将是值得的,如果你想出售它). The Value of the Firm should include

  1. How much money the company is worth today and
  2. Expected profits in the future. 

Mathematical Equation for Calculating the Value of the Firm

  1. Value of the Firm = Current Profit + Expected Future Profit.

Each Year’s Profit is calculated with the following formula:

  • X = Current or Expected Accounting Profit (预期会计利润) = Revenue – Explicit Costs
  • R = Risk-Adjusted Discount Rate (风险调整贴现率) (although we hope we will make the expected accounting profit this year or in future years, there is always the possibility that we will not. No one will pay us the full expected value of the company because of this risk. So to give the buyer some protection, just in case, we remove the Risk-Adjusted Discount Rate from the total.)(我们从方程中删除的金额,因为我们现在可能不会真正使所有预期的利润,我们想要的)
  • T = Number of Years from Today

EXAMPLE

Year 1, Company A makes $180,000. Year 2, Company A makes $150,000. Year 3, Company A makes $100,000. The Risk-Adjusted Discount Rate is 13%. 1年,公司180000美元。2年,公司150000美元。3年,公司100000美元。风险调整贴现率为13%

The Equation for 1 Year is:

The Equation for 3 Years is:

Filling in our known information, the equation for the Value of Our Firm is:

Value of the Firm = $346,069

 

Economics ~ Introduction to Managerial Economics

24 Mar

Hello-our internet sucks, so I’m posting this for some of my students 🙂 You’re welcome to enjoy it too!

What is Managerial Economics?

  • Economics (经济学)= The study of how resources (资源) are created (创造), gathered (搜集,聚集), traded (营业), and divided (分离,划分).
    • Resources = Anything you use to help the company work. Examples: time, money, land, tools, labor, raw materials.
      • Natural Resources (自然资源) = Resources created by nature. Examples: wood, water, air, rocks/stones, flowers, natural chemicals
      • Man-Made Resources (人造资源) = Resources created by humans by either combining (mixing together) or changing natural resources into something new. Examples: jewelry, paint, fabric, steel, hammers.
      • Limited Resources (限制性资源) = Resources either no longer being created or only created in small amounts. Meaning the supply is not enough.Examples: Gold, Diamonds, Water in a desert.
      • Unlimited Resources (无限制性资源) = Where there is a large amount of the resource or it is created fast enough to replace any that is lost. Supply is enough.Examples: Water, Air.
      • Raw Materials (原材料) = The resources that are put into the product. Example: If we make a computer, raw materials would include wires, plastic, metal, paint, springs, etc.
      • Market-Supplied Resources (市场提供的资源) = Resources owned by someone outside of the company. Examples = Taxes, Utilities, Rent, Raw Materials, Wages
      • Owner-Supplied Resources (业主提供的资源) = Resources owned by the company’s owners.
  • Manager (经纪, 经理) = A person who is obligated to ensure the company (or department) is effectively organized and controlled.
  • Managerial Economics (管理经济学) = The study of the best method for managers to create, gather, trade, and divide the company’s resources.

Goal of Effective Managers 

  • Wealth or Profit (收益) Maximization Rule = #1 Goal of Effective Managers is to make the owner’s the most profit (as long as they do so ethically and legally)

How to Maximize Profits (收益)?

  • Profit = Revenue – Cost
  • Two ways to Maximize Profit:
    • Make the Highest Revenue
    • Pay the Lowest Costs

What are Revenue, Cost, and Profits?

  • Revenue (收入) = Total Income or Money the Company makes from its work.
  • Cost (成本)  = The losses or sacrifices the company makes in exchange for getting and using resources in its work. 
    • Opportunity Costs (机会成本) = The company’s costs created because it lost some opportunity. 
      • Opportunity Cost of using Market-Supplied Resources = $$ Spent paying for those resources (you lose the opportunity to spend the money on something else)
      • Opportunity Cost of using Owner-Supplied Resources = $$, time, effort lost that the owner would have had if they spent their resources on something else.
    • 2 Types of Opportunity Costs
      • Explicit Costs (明确的成本) = Any money the company pays owners of Market-Supplied Resources
      • Implicit Costs (隐性成本) = Anything the Owner loses by giving the company Owner-Supplied Resources
    • Total Economic Cost = Explicit Costs + Implicit Costs 
  • Profit (收益)  = Everything the company gets to keep from the Revenue after it pays its costs!
    • Present Profit v. Future Profit
      • Present Profit = What we are keeping right now. (Most Important)
      • Expected Future Profit = What we think we’ll get in the future (Companies with higher expected future profits have more value. While companies with a possibility of low future profits will have a lower value)
    • Profit is Counted in Two Ways
      • Example: Joshua has a company (Company A) that just made $150,000 in Revenue. The company spends $9,000 on Taxes and Utilities, $3,000 on Wages, and $5,000 on Raw Materials. Joshua gave the company the building but would have made $2,000 if he used it as a school instead. He also lost $5,000 on his original investment. 
      • Economic Profit (经济利润) = Revenue – Total Economic Cost
        • What is Company A’s Economic Profit?
      • Accounting Profit (会计利润) = Revenue – Explicit Costs.
        • What is Company A’s Accounting Profit?
      • In Managerial Economics, we usually mean Accounting Profit when we say “Profit”

More to come later 🙂

Sample Corporate Balance Sheet

24 Mar

Assets.png

If you are looking for a Sample Balance Sheet, here is one I created for my Corporate Finance students.  It’s not perfect of course, and you can always add or subtract things. Just download it as a Word Doc (or if that is not available, copy and paste to a word doc) and modify to suit your needs!

SAMPLE BALANCE SHEET

Here are some real-world examples you can use to compare:

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