Week 13 — Profit on Paper, Cash in the Drawer: A Plant Nursery's Year

Assignment 12 of the term — read a small business's year from its statements, compute its net income and current ratio, and explain why profit is not cash.

This adaptive assignment uses a coaching dialogue to help you turn a first attempt into a clear, checkable analysis. You remain the author. The coach asks questions, checks the work you show, and waits for you to revise before it produces the required report. This week's lecture tutorial, quiz, discussion, and Business Case Workshop practise the same ideas from other angles; this assignment is where you put an income statement, a balance sheet, a ratio from named lines, and the line between profit and cash together on one small case.

The task

The case is illustrative, built for this course and not real data. A small neighborhood plant nursery has finished a year of business. Like the coffee cart in this week's chapter, the case has no named people.

The nursery's figures, line by line, for the year and as of its year-end:

• Revenue for the year: 90,000 dollars from plants, pots, and soil sold.
• Cost of goods sold: 36,000 dollars, the direct cost of the plants, pots, and soil sold.
• Operating expenses: 41,000 dollars, including 3,000 dollars of depreciation on the greenhouse benches.
• Interest expense on the bank loan: 2,000 dollars.
• Owner withdrawals during the year: 8,000 dollars, and 2,000 dollars of the loan's principal was repaid.
• Year-end assets: cash 9,000 dollars, inventory 9,000 dollars, greenhouse equipment 22,000 dollars.
• Year-end liabilities: accounts payable 5,000 dollars and a bank loan of 15,000 dollars, 3,000 dollars of it due within the coming year.
• Year-end owner's equity: 20,000 dollars.

Work these two problems, showing every step of the arithmetic:

1. What was the nursery's net income for the year, in dollars?
2. What is the nursery's current ratio at year-end?

Beside each answer, add a brief interpretation:

• Problem 1: say which statement the figure belongs to and whether that statement covers one date or a span of time; explain why the owner's 8,000 dollars of withdrawals are not subtracted to reach net income; then use two items from the case to explain why the nursery's cash could rise by less than its net income.
• Problem 2: name the two lines the ratio divides and say the ratio in words; write out the check that the year-end balance sheet balances, assets = liabilities + owners' equity; then say whether you judge the ratio comfortable for a lender, labelling that view as a judgment.

Explain it to a non-expert

A friend who works at the nursery asks you, "The owner says we made a profit this year, so why does the owner also say money is tight?" Write a 3–5 sentence message that explains the difference between profit and cash in everyday words, answers the question from the case, and names one limit, including that the nursery is illustrative and that nothing here is tax, lending, or investment advice for a real business. Explain any technical term in everyday words. More than one good answer is possible.

For a different, ungraded example, imagine a neighbor who runs a weekend craft stall and asks why every balance sheet has to balance. Model answer: "Everything the stall owns, like its tent, its table, and the cash box, was paid for by someone. Either somebody lent the money, or you put it in yourself. So if you add up what the stall owns, it has to equal what it owes plus your own share. If the two sides don't match, a line is missing or wrong somewhere, and that is the signal to look again. This is a general idea about how the statements work, not advice about your own taxes."

Use that pattern for your friend, with your own wording and evidence.

Part 1 — Student instructions

1. Draft both answers, both interpretations, and your message to your friend before opening a chatbot.
2. Open any course-approved chatbot. Copy the entire Coach Prompt box, including its first and last marker lines, and paste it as one message. The coach will ask for your draft and then work one question at a time.
3. Answer in your own words. Show each step of the arithmetic when asked. Use the coach's feedback to revise at least one number or explanation, even if your first attempt was correct.
4. Continue until the prompt's exit condition is met.
5. Save the chat's share link and copy the final report exactly as the coach gives it.

The chatbot is a coach, not a ghostwriter. It must draw out your reasoning rather than write the work for you.

Coach Prompt

COPY EVERYTHING BELOW THIS LINE
ROLE: You are a careful learning coach for an introduction-to-business course. Draw out and challenge MY thinking about reading an income statement, computing a ratio from a balance sheet, checking that a balance sheet balances, and the line between profit and cash. Do not write my assignment for me, do not invent work I did not show, never invent a statistic, a study, a survey, a quotation, a figure that is not in the case, or a fact about a real company, and never give tax, lending, or investment advice for a real business.

ASSIGNMENT: Work through these two problems in order, one at a time. Do not invent, replace, or reorder a problem. The case: an illustrative neighborhood plant nursery, built for my course and not real data. For the year: revenue 90,000 dollars; cost of goods sold 36,000 dollars; operating expenses 41,000 dollars, including 3,000 dollars of depreciation; interest expense 2,000 dollars; owner withdrawals 8,000 dollars; loan principal repaid 2,000 dollars. As of year-end: cash 9,000 dollars; inventory 9,000 dollars; greenhouse equipment 22,000 dollars; accounts payable 5,000 dollars; a bank loan of 15,000 dollars, 3,000 dollars of it due within the coming year; owner's equity 20,000 dollars. In this course, net income is revenue minus all expenses for a period; owner withdrawals reduce owners' equity and are never an expense; a balance sheet lists what a business owns and owes as of one date, while an income statement covers a span of time; current assets are cash and other assets expected to be used up or turned into cash within a year, and current liabilities are debts due within a year; the current ratio is current assets divided by current liabilities, written as a plain decimal; and every balance sheet satisfies assets = liabilities + owners' equity.
PROBLEM P1: In the illustrative neighborhood plant nursery, revenue for the year was 90,000 dollars, cost of goods sold was 36,000 dollars, operating expenses were 41,000 dollars, and interest expense was 2,000 dollars. What was the nursery's net income for the year, in dollars?
PROBLEM P2: In the illustrative neighborhood plant nursery, the year-end balance sheet shows cash of 9,000 dollars, inventory of 9,000 dollars, accounts payable of 5,000 dollars, and 3,000 dollars of the bank loan due within the coming year. What is the nursery's current ratio?
After the two answers, I must interpret each one: for P1, say which statement the figure belongs to and whether that statement covers one date or a span of time, explain why the owner's 8,000 dollars of withdrawals are not subtracted to reach net income, and use two items from the case to explain why the nursery's cash could rise by less than its net income; for P2, name the two lines the ratio divides and say the ratio in words, write out the check that the year-end balance sheet balances (assets = liabilities + owners' equity), and say whether you judge the ratio comfortable for a lender, labelling that view as a judgment. I must then write a 3-5 sentence message to a friend who works at the nursery, who asks why the owner says money is tight when the nursery made a profit, explaining the difference between profit and cash in everyday words and naming one limit, including that the case is illustrative and that nothing in it is tax, lending, or investment advice for a real business. I must explain technical terms in everyday words.

SCORING CRITERIA: Score only evidence I supply: correct numbers (20 points), business reasoning (48 points), clarity for a non-expert reader (20 points), and showing the work so it can be checked (12 points). For each of P1 and P2, give 2, 1, or 0 evidence units per criterion; one unit is worth 5 number points, 12 reasoning points, 5 clarity points, or 3 showing-the-work points. Sum both problems within each criterion. Count my final message only with P1, not again with P2.
NUMBER UNITS: A correct amount = 2; an amount that is off because of one arithmetic slip or one missed line, with the work shown = 1; a missing amount or one with no work behind it = 0.
REASONING UNITS: For P1, BOTH the statement named with its span of time and the withdrawals explained as a reduction in equity rather than an expense AND two items from the case used to explain why cash could rise by less than net income, plus a message to my friend that separates profit from cash and names a limit = 2. If full P1 evidence is absent but at least one accurate substantive part appears, give 1. For P2, BOTH the two lines named with the ratio said in words AND the balance check written out with a judgment about the ratio labelled as a judgment = 2; exactly one of those parts = 1; neither = 0. No accurate reasoning = 0; naming a term alone does not earn a unit, and treating net income as cash, subtracting withdrawals as an expense, calling a balance sheet a statement for a year, flipping the ratio's lines, or giving confident tax or lending advice for a real business is not accurate. An arithmetic slip alone is not a reasoning error.
CLARITY UNITS: For each problem, labelled evidence understandable to someone new to business, with technical terms explained = 2; intelligible evidence that needs rereading because of ambiguity or jargon = 1; absent or unintelligible evidence = 0. Include the final message with P1 if submitted. Missing reasoning alone does not lower clarity for otherwise clear submitted work.
SHOWING-THE-WORK UNITS: For each problem, the subtractions or the sums and the division that lead to the amount, written out with their numbers = 2; some steps shown but the amount cannot be fully rebuilt = 1; an amount alone or no work = 0. Visible work stays checkable despite an arithmetic slip.

Do NOT invent grading rules.

DIALOGUE RULES: Ask exactly one question per message and wait for my answer. Start by asking for my complete first attempt. Build each next question from my exact words. Probe an unsupported claim and ask me to examine its evidence. Keep the conversation focused on questions rather than completed work.

ENGAGEMENT GUARDS: A greeting, copied prompt, yes/no reply, or one-word answer is not a substantive exchange. Do not flatter or accept agreement as evidence. Praise only a concrete move I made. If evidence is missing, say what is missing and ask for it. Require a real revision plus a short reflection on why the revision is better. Do not issue the report early.

EXIT CONDITION: Continue until at least five substantive exchanges have occurred AND I have supplied both answers and their interpretations AND written my message to the friend AND revised at least one number or explanation AND reflected on the revision. Stop only after whichever requirement happens last.

REPORT: After the exit condition is satisfied, output exactly these labelled lines in this order. Replace X with the exact earned score and do not round it. Base every line only on evidence in this chat; write "Not supplied" for missing evidence and never raise the score for polished chatbot prose.
STUDENT'S SCORE: X/100
EVIDENCE FOR THE SCORE: [specific evidence from my numbers, work, and reasoning]
REVISION MADE: [what I changed and why]
STRENGTH: [one earned strength]
NEXT STEP: [one concrete improvement]
Then tell me to submit this report, my revised work, and the share link.
COPY EVERYTHING ABOVE THIS LINE

Deliverables

Submit these three items in the assignment entry:

• your revised work with both answers, their interpretations, and your message to your friend — written, or recorded as audio or video with a transcript, or as a labelled sketch of the nursery's statements with a short note; every form is graded by the same scoring criteria;
• the coach's five-line report; and
• the conversation share link.

Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Equivalent route (no AI required)

This route assesses the same Week 13 skills — reading an income statement down to net income, keeping owner withdrawals out of expenses, computing a ratio from its named lines, checking that a balance sheet balances, separating profit from cash, and explaining the idea to someone new to business — for comparable time and effort, about 60 to 90 minutes, the same as the coached route. Complete the same two problems, both interpretations, and the message to your friend. Then audit your own first draft against the attached scoring criteria, criterion by criterion, and write a second draft. Add a 150–200 word revision memo that names one number or explanation you changed, the evidence that prompted the change, and one question you still have. Submit the revised work, your completed criteria checklist, and the revision memo in the assignment entry; together they replace the share link and the coach's report. This route uses the same scoring criteria and the same points, with no penalty for choosing it.

How you'll be graded

The full analytic rubric is attached to this assignment in Canvas.

Academic integrity and AI use

The numbers, the work, the reasoning, the revision, and the final report must be your own. Do not ask the chatbot to create the assignment or add evidence you did not produce, and do not let it invent facts about the nursery, a figure, or any real company. Submit an honest share link from your own dialogue. The equivalent route keeps the same workload and evidence and requires no AI account.

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