Compare near-term resources and obligations
See this course’s project requirements
A checked financial brief with statement scope, margins, cash reconciliation, liquidity ratios, note questions and a spending recommendation.
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What to include
- A dated statement map with checked balance-sheet totals.
- A two-year gross and operating margin comparison. A profit-to-cash bridge that reconciles to closing cash.
- A liquidity note with working capital and two coverage ratios.
- A note-review log with quantified risks and follow-up questions.
- A one-page financial brief supporting a conditional spending decision.
Review and revise
Use these criteria to check your work and choose what to improve.
- Calculations reconcile to the supplied records, with units and dates labeled.
- Assumptions and missing information are visible, including the changed scenario.
- The recommendation follows the evidence and explains an important limitation.
- The six lesson outputs form a usable handoff that another learner can check.
Want more background?
The idea in everyday life
Use Cedar Print’s balance table again. Current assets are cash, receivables and inventory. The quick ratio here excludes inventory and there are no prepaid assets.
A liquidity ratio indicates coverage, not certainty that inventory and receivables can pay tomorrow’s bills.
Compare near-term resources and obligations — worked practice
A liquidity ratio indicates coverage, not certainty that inventory and receivables can pay tomorrow’s bills.
Use Cedar Print’s balance table again. Current assets are cash, receivables and inventory. The quick ratio here excludes inventory and there are no prepaid assets.
Cedar Print: year-end balances, dollars
Paste at A1.
| AItem | BYear 1 | CYear 2 |
|---|---|---|
| Cash | 2000 | 1500 |
| Receivables | 3000 | 4500 |
| Inventory | 5000 | 6000 |
| Equipment net | 10000 | 11000 |
| Current liabilities | 4000 | 5000 |
| Long-term liabilities | 6000 | 6000 |
| Equity | 10000 | 12000 |
Copy as plain text
1. Total current assets
Add the first three asset rows in each year.
You should see: Current assets are $10,000 and $12,000.
Equipment is outside the near-term pool.
2. Calculate working capital
Subtract current liabilities from current assets.
You should see: Working capital is $6000 and $7000.
This is a dollar difference, not a percentage.
3. Compute coverage
Divide current assets by current liabilities, then repeat without inventory.
You should see: Current ratios: 2.5 and 2.4; quick ratios: 1.25 and 1.2.
The measures reveal different dependencies on stock.
4. Explain the tension
Write a note combining working capital, ratios and cash.
You should see: Working capital rises but both ratios and cash fall; ask when receivables will be collected.
No universal ratio proves safety for every business.
What to finish
A liquidity note with working capital and two coverage ratios.
Watch for this
Assuming all current assets are spendable cash today.
How can I tell I understand it?
Explain your calculation or classification and reproduce the changed case without copying the worked result.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
Go to the knowledge checkOptional course overview video · same video as Lesson 1
How the Income Statement and Balance Sheet are Connected | Example
From Edspira. Watch here or open it on YouTube .
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Sources and further reading
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Source & access notes · checked 2026-09-12
Inspected statement definitions, operating cash flow, notes, margins and working capital.
Access: Public page inspected without a sign-in; linked services may have separate requirements.
Reuse: Link to the original. Free reading does not imply permission to reproduce the page; lessons and fixtures here are original.
Source & access notes · checked 2026-09-12
Inspected linked statements and ratio interpretation.
Access: Public article inspected; no enrollment required.
Reuse: Link to the original. Free reading does not imply permission to reproduce the page; lessons and fixtures here are original.
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