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Portfolio

Third Unit

Third Unit Third Unit

Mariajose Santizo

5 ACCT

Key No.

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Commercial………………………………………………………………...1

Credit Letters…………………………………………………………2

Applications…………………………………………………...3

Credit Inquiry………………………………………………….4

Credit Response……………………………………………...5

Credit-Granting Letter………………………………….……6

Credit Refusing…………….………………………………….7

Collection Letters……………………………………………………8

Step 1…………………………………………………………...9

Step 2…………………………………………………………...9

Step 3………………………………………………………….10

Step 4………………………………………………………….10

In-house Correspondence.………………………………………11

Memorandum……………………………………………….11

Minutes………………………………………………………..13

Glossary……………………………………………………………...15

Marketing…………………………………………………………………..20

Bonds………………………………………………………………...21

Stocks and Shares…………………………………………………22

Takeovers……………………………………………………………23

Glossary……………………………………………………………...25

Partial Test………………………………………………………………….34

Reflective Essay…………………………………………………………...36

Opening the Doors to the Business World……………………37

Index

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Commercial

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Credit

Letters Credit involves purchasing and receiving goods

without immediate payment. Credit transactions are

common and essential in business. There are five types

of credit correspondence:

• Application for credit

• Inquiries about credit worthiness

• Responses about credit worthiness

• Letters granting credit

• Letters refusing credit

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Applications Customer applications for charge accounts are usually made by

filling out application forms, but business account applications are

usually made letter. A letter of this kind should include credit

references.

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Credit Inquiry Credit bureaus keep files on people and businesses whose credit

references and histories they have investigated. When they

determinate an applicant’s credit standing they give the

applicant a credit rating. Based on this rating they decide

whether or not to grant the applicant credit.

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Credit Responses It’s important for companies to control the information given out

and to limit the information to verifiable facts such as the amount

owed, the maximum credit allowed and the degree of

promptness in payment.

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Credit-Granting Letters

When all credit references are favorable a letter is sent to the

customer to notify him that the credit has been approved. This

letter should:

o Welcome the customer

o Explain credit terms

o Establish goodwill

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Credit-Refusing Letter The reason for which a company is denying a credit application

may be expressed vaguely, trying to encourage business on cash

basis. The tone must be positive and you-oriented. Suggest that

the customer reapply for the future.

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Collection

Letters The main purpose of writing this letter is to get the

money owed and maintain goodwill. It should be firm

rather than demanding. They should be you-oriented,

courteous, considerate and concerned about the

customer’s best interest. The first letter is the mildest

and most understanding, while the final letter in a

series threatens to turn the matter to a lawyer. This

letter should contain:

o The amount owed

o How long the bill is overdue

o Specific action the customer may take

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Step 1 The monthly statement reminds the customer of outstanding bills,

if it is ignored and a week has passed, the company may send a

second statement, stating “past due”.

Step 2 The second collection letter should still be friendly. It should seek

to excuse the unpaid bill as an oversight. Stress on future sales,

rather than on payment.

Our records indicate that the balance of $_______ on your

account is now past due. Payment is requested.

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Step 3 This letter is still friendly but also firm. Expressing confidence in the

customer’s intention to pay, asking the customer the reason for

the delay. It should make an appeal to the customer’s sense of:

o Fairness

o Cooperation

o Obligation

Step 4 A threat of legal action is sometimes all that will motivate a

customer to pay. In this letter the company gives the customer

one last chance to pay before steps are taken.

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Memorandum Memos are used to prevent future misunderstandings memos

provide a simplified, standardized format for communicating

information concisely. The tone of memos tends to be more

informal than the tone on a business letters, however it’s important

to maintain a courteous tone. It is not prepared on company

letterhead, nor does it include an inside address, salutation and

complimentary closing.

In-Hose Correspondence Business people frequently communicate in writing with

employees of their own company. The main purpose of

this letter is to share information.

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Minutes Some meetings are held at fixed intervals, while others are called

for special reasons. Minutes are a written record of everything

that transpires at a meeting. A secretary takes notes during the

proceedings and later on prepares a draft that includes all the

pertinent information. The minutes of the formal meetings are

made verbatim, meaning they include word for word of

everything that is said or done. They should include the following

facts:

The name of the organization

Place, date and time of the meeting

Whether or not the meeting is regular

Name of the person presiding

Record of attendance

Reference to the minutes of previous meetings

Account of all reports and motions made

Date, time and place of the next meeting

Time of adjournment

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Glossary

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Adequate Sufficient, enough

o When cooking it’s important to use

adequate ingredients.

Confidential Secret, private

o All information received must be kept

confidential.

Discreet Showing good judgment, prudent

o Commercial letters should not only

generate good will but they should

also be discreet.

Libel Giving an unjustly unfavorable

impression of a person or thing.

o When responding to a letter, the

information provided shouldn’t be

libel. 16

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Outstanding Unpaid

o Mr. Michaels has an outstanding bill

to cover

Rebate Discount, return of part of payment

o The company made him a rebate

because he has always been an

incredible client.

Accessible Understandable

o Information contained in minutes

must be accessible to all employees.

Agenda List, schedule

o It’s important for minutes to include

the date of the next meeting so that

the employee takes note of it in their

agenda. 17

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Preside To act as a chairperson, to lead

o Mr. Williams was presiding last

month’s meeting.

Pertinent Relevant

o It’s important to include only

pertinent information in those kind of

documents.

Motion Proposal

o Many motions were discussed during

last week’s meeting.

Dispense To give out

o Fliers were dispersed throughout the

city.

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Transpire To take place, to happen

o The next meeting will transpire in the

employees’ cafeteria.

Verbatim In the same words

o During a formal meeting secretaries

usually take verbatim notes.

Resolution Statement of a decision or opinion

o We presented the resolution to Mrs.

Jacobs yesterday.

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Marketing

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Bonds Companies might generate cash flow by issuing bonds.

They usually use investment banks to issue them and

find buyers. Bondholders get their original investment

on a fixed maturity date, and they receive interest

payments at regular intervals until then. Bonds are

generally safer that shares because even if the

company goes bankrupt it has to pay you back. Bond

interest is tax deductible. Treasury bonds have a

maturity date of two to ten years while treasury bonds

have maturity of ten to 30 years. Bonds can be traded

on the secondary bond market. They quote bids and

offer prices for bonds with very little difference between

them. When you hear the term “yield” of a bond, it is

how much income it gives.

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Stocks &

Shares Companies might also generate cash flow by selling

shares. They are certificates that represent part

ownership of the company. Selling stocks for the very

first time is called Initial Public Offering. The nominal

value of a share (the price written on it) is hardly ever

the same as its market price. Companies distribute

part of their profits to keep profits in the company. A

period during which most stocks are rising is called bull

market, and when must of them fall is called bear

market.

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Takeovers

Sometimes it is easier to take over with already existing

products and clients rather than coming up with a

new company. Acquiring a company that’s in the

same field is called horizontal integration. Buying

businesses involved in other parts of their supply chain

is called vertical integration. Backward integration is

acquiring suppliers of raw material and forward

integration is the same but with distributors or retail

outlets. To merge with another company is to combine

with it to form single one. A raid is to buy as many

shares as possible on a stock market. A takeover bid is

a public offer to a company’s stockholders to buy

stocks at any price during a limited period of time. The

buyer has to purchase 100% of the company’s stocks.

If the company doesn’t want to be taken over it’s a

hostile bid. A buyout is to buy people out of their

company through the emission of bonds. Private

equity funds are respected for buying companies and

making them more efficient.

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Glossary

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Cash Flows The money a company receives minus

the money it spends.

o Companies issue bonds to generate

cash flow.

Equity Part ownership of a company in the

form of stocks or shares

o People must pay a fair amount in

order to receive equity.

Mutual Funds Funds operated by investment

companies that invest people’s money

in various assets

o The company used mutual funds to

buy new machinery.

Pension Funds Funds that invest money that will be

paid to people after they retire from

work

o The company used pension funds to

buy assets. 26

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Coupon The amount of interest a bond pays.

o The coupon is an important part of a

bond.

Principal The amount of capital making up a

bond or another loan

o The principal is written on the bond.

Maturity The length of time for which a bond is

issued

o You must know a bonds maturity

date.

Bankrupt Unable to pay debts

o The company went bankrupt and

wasn’t able to pay off any of its

debts.

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Market Makers Businesses that buy and sell securities

o Secuguate is a market maker.

Creditor People or institutions to whom money is

owed

o Banks are usually good creditors,

Dividends Payments by companies to their

shareholders.

o The company made many dividends

last month.

Bid The price for which a buyer is prepared

to buy a security at a particular time

o Mr. Johnson was present at the bid.

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Kick-start To revive or stimulate something

o In order to become successful we

must have a powerful kick-start.

Yield The rate of income an investor receives

from a security.

o The yield of a bond depends on both

its purchase price as well as its

coupon.

Soared Rose quickly

o Our sales soared this week.

Offer Price The price for which a seller is prepared

to sell a security at a particular time

o The offer price for the share was

$20000.

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Rally An improvement or increase in prices

o This week we had a rally in the

company.

Benchmark Standard used when comparing other

things

o We used last month’s statistics as

benchmark for this month’s sales.

Recession Period where the economy is

contracting.

o Spain is having a recession.

Defaulting Failing to repay a loan

o The company has defaulted many

times during the last couple of years.

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Retail Outlets Places where goods are sold

o Supermarkets are the most common

retail outlets in Guatemala,

Controlling Interest Market Sufficient number of shares to be able

to decide what to do

o Mr. Botran has the controlling interest

market.

Go Bust Going bankrupt

o The company went bust last year.

Diversified To become more varied or different

o We want to diversify our products.

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Synergy Power when things combine is greater

than when separated.

o Companies that merge show a lot of

synergy.

Fees Amount of money paid for a service

o This month’s fee was higher than the

last one because expenses

increased.

Conglomerates Companies that owe smaller

companies selling different products.

o Companies conglomerate in order to

reduce their competition and

become better companies.

Listed Companies Public companies whose stocks are

traded on a stock exchange.

o I’ll be looking at this month’s listed

companies before I decide which

stock to purchase.

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Pension Fund A sum of money reserved to pay a

company’s retired employees.

o A company’s pension fund should

always be up to date.

Market Capitalization Total value of a company on the stock

exchange

o Walmart has a high market

capitalization.

Subsidiaries Companies that are owned by a larger

parent company

o McDonald’s has many subsidiaries.

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Partial Test

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Reflective Essay

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Opening the Doors

to the Business

World

Commercial and marketing are two subjects in which we learn about

the business world and some of the things we need to know in order to

be successful in it. Throughout the year we’ve been learning a little bit

of every business-related topic. Going step by step, each unit

challenging ourselves more.

Throughout the unit, in marketing, we learned about bonds, shares and

takeovers. We learned how companies can generate cash flow by

issuing bonds or selling shares. We also learned about mergers and

takeovers. When two companies merge, they combine themselves

and form a new company and maximizing to create synergy. A

takeover is when a company acquires another one and the acquired

company completely loses its identity.

In commercial we learned how to write not only credit and collection

letters, but we also learned how to write in-house correspondence. You

can write a credit letter when you want to apply for credit, give or ask

for references and when you either grant or refuse a credit application.

You use collection letters when you wish to collect money from an

overdue bill. In-house correspondence is used to prevent

misunderstandings within the company.

They are both interesting subjects from which we learn a lot. Teachers

do their best to explain certain topics to us but it’s up to each and every

one of us to pay attention in class, that way we understand better, and

to put everything we’ve learned throughout the year in practice.

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