When people want to set up or start a company, they need money, called capital. Companies can borrow this money, called a loan, from banks. The loan must be paid back with interest which is the amount paid to borrow the money.
The money that a business uses for everyday expenses or has available for spending is called working capital or funds.
AII themoney coming into a company during a given period is revenue. Revenue minus the cost of
sales and operating expenses, such as rent and salaries, is known as profit, earnings or net income.
The part of its profit that a company pays to its shareholders is a dividend Companies pay a
proportion of .their profits to the government as tax, to finance government. They also retain, or
keep, some oftheir earnings for future use.
Share capital Revenue Dividends
Debt.(bondand loans) Expenses
Companies give information about their financial situation ín financial statements. The balance
sheet shows the company's assets - the things it owns: its liabilities - the money it owes; and its
capital. The profit and loss account showsthe company's revenues and expenses during a
particular period, such as three months or a year
THEMATIC UNIT II
Mexico has one of Latin America’s most developed banking systems, consisting of a central bank
and six types of banking institutions: public development banks, public credit institutions, private
commercial banks, private investment banks,savings and loan associations, and mortgage banks
Other components of the financial system include securities market institutions, development
trust funds, insurance companies, credit unions, factoring companies, mutual funds, and bonded
The central bank, the Bank of Mexico "Banco de México", regulates the money supply and foreign
exchange markets, sets reserve requirements forMexican banks, and enforces credit controls.lt
serves as the fiscal agent of the federal government, the issuing bank for the new peso, and a
discount house for private deposit banks.lt supervises the private banking sector through the
National Banking Commission, and it provides funds for government development programs.
Mexico has a number of other official banks for agriculture,foreign trade, cooperatives, public
works, housing, transportation, and the sugar industry, among other specialized purposes. The
most important such development institution is the Nafinsa, which provides financial support for
Mexico's industrialization program Nafinsa provides medium-term financing and equity capital for productive enterprises, promotes Mexican investment companies, overseesthe stock market and the issuance of public securities, and serves as the legal depository of government securities
The private banking sector consists of more than 200 banks, which together have more than 2,500
Mexico's two largest private banks are the Bank of Commerce (Banco de Comercio-Bancomer), comprising thirty-five affiliated banks with more than 500 branches, and theNational Bank of Mexico (Banco Nacional de México-Banamex). Development banks, known as financieras and organized by commercial banks in association with major industrial enterprises, provide most of the private sector's development financing.
In the wake of the financial sector crisis, the government introduced in niid-1995 a program for
rescheduling bank loans using index-linked investment units.In September 1995, the government
unveiled another emergency program of aid for bank debtors, which was to provide relief for 8
million bank debtors. By February 1996, 83 percent of eligible loans had been restructured under
this program By mid-1996, the cost of the government's various efforts to prevent a banking
system collapse was estimated at 91billion new pesos. The government held...