In our interconnected world, a company's performance can affect economies, jobs, and investments globally. Businesses regularly release reports to show their financial health, and understanding these reports is a key skill in academic and professional settings. In this lesson, we will act like financial journalists to learn how to read and interpret business news. We will focus on the specific vocabulary and grammar used to report on risk and reward, allowing you to accurately assess a company's situation.
Vocabulary: The Language of Business
To understand financial news, you first need to know the key terms. These words help describe a company's health and future prospects. Pay attention to how they are used in context.
| Word | Definition | Example |
|---|---|---|
| earnings | The amount of profit a company produces during a specific period. It is often considered the single most important number in a financial report. | The tech giant reported record earnings for the fourth quarter, surprising most analysts. |
| forecast | A prediction or estimate of future events, especially a company's future financial performance. | The company's forecast for the next year is optimistic, predicting a 15% growth in sales. |
| downturn | A period when a business, the economy, or a market becomes less successful or active. | During the economic downturn, many companies were forced to reduce their workforce. |
| outperform | To do better than something or someone else, such as another company or market expectations. | The new smartphone has consistently outperformed its competitors in speed and battery life. |
| shareholder | An owner of shares in a company; another word for stockholder. | The CEO addressed the shareholders, explaining the strategy to increase the company's value. |
| margin | The difference between the cost of producing something and the price it is sold for. A healthy profit margin is crucial for a company's long-term success. | Increased competition has put pressure on the company's profit margin. |
| quarterly | Happening or produced once every three months. Public companies are required to release quarterly financial reports. | The quarterly report shows that revenues have increased since the last period. |
Grammar Focus: Reporting on Performance
Financial reporting often uses specific grammatical structures to sound objective and formal. Let's look at two common patterns you will see in business news.
Passive Voice with Data
In business and scientific writing, the focus is often on the result, not on who performed the action. The passive voice is used to maintain an objective tone. The structure is: $Subject + be + past:participle$.
Active Voice: The company reported a profit of $5 million. (Here, the focus is on "the company.")
Passive Voice: A profit of $5 million was reported. (Here, the focus is on "the profit.")
More Examples:
- The new product line was launched last month.
- A significant increase in sales was recorded in the third quarter.
- It is expected that the market will experience a slight downturn.
Reported Changes: Past Simple vs. Present Perfect
When discussing changes over time, writers choose tenses carefully to convey precise meaning.
Use the Past Simple for actions that were completed at a specific time in the past. Look for time markers like "last quarter," "in 2023," or "yesterday."
The company's stock price dropped by 5% last week.
They outperformed their main rival in the final quarter of last year.
Use the Present Perfect for actions that started in the past and are still relevant or continuing now, or for changes that happened at an unspecified time in the past but have a present result.
The company has seen its market share grow steadily over the past few years. (The growth is ongoing or has a current result.)
The CEO has announced a new strategy to improve profit margins. (The announcement is recent and its effects are current.)
How to Read an Earnings Report
This video from MarketWatch explains the key components of a corporate earnings report.
Reading Lab: Analyzing a Report
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