Listen to a Business English Dialogue About Short term gain or loss
Kenneth: Hi Samantha, do you understand what “short-term gain or loss” means in business and finance?
Samantha: Yes, I do. Short-term gain or loss refers to the profit or loss generated from the sale of assets held for less than a year.
Kenneth: That’s correct. Short-term gains are subject to higher tax rates compared to long-term gains, which are generated from the sale of assets held for over a year.
Samantha: How do businesses typically account for short-term gains or losses?
Kenneth: Businesses report short-term gains or losses on their income statements, detailing the proceeds from the sale of assets minus their original cost.
Samantha: Can you give an example of a short-term gain or loss scenario?
Kenneth: Sure, if a company sells shares of stock it held for less than a year at a higher price than it paid, it would generate a short-term capital gain.
Samantha: And what about a short-term loss?
Kenneth: If the company sells those shares at a lower price than it paid within a year, it would incur a short-term capital loss.
Samantha: How do short-term gains or losses impact a company’s financial health?
Kenneth: Short-term gains can boost a company’s profitability in the short run, while short-term losses can reduce earnings and potentially impact investor confidence.
Samantha: Are there any strategies businesses use to minimize short-term losses?
Kenneth: Yes, businesses may employ various strategies such as tax-loss harvesting or carefully timing asset sales to offset short-term losses with gains.
Samantha: Thanks for explaining, Kenneth. Short-term gains and losses play a crucial role in assessing a company’s financial performance.
Kenneth: You’re welcome, Samantha. Understanding these concepts is essential for investors and business owners alike.