Week 13 — Keeping Score: Accounting & Financial Statements
Welcome to your Week 13 Start Here page.
Why this matters
Whether you run a coffee cart or review a bike shop's loan request at a bank, you need to read what a business owns, earned, and spent.
In plain language
Every business tracks how it is doing in money, and accounting (the work of recording, sorting, adding up, reporting, and reading a business's money activity) is how it keeps that record. This week you read the three financial statements (the standard reports a business prepares from its records). One shows what the business owns and owes on a single day, one shows what it earned over a year, and one shows where its cash went. You will check that a statement balances, explain why a profitable business can still be short of cash, and compute four ratios that lenders and owners read. You read the statements here; you never build them from single sales.
- Already covered: Week 7 found the break-even.
- This week: the three statements and four ratios.
- How they connect: the plans meet a real year.
- Where we're going next: Week 14, Paying for Growth.
Focus
What do a year's financial statements say about a business, and why is profit not cash?
By the end of this module, you should be able to:
- [ ] check that a balance sheet balances
- [ ] read an income statement to net income
- [ ] explain why profit is not cash
- [ ] compute four ratios from named lines
To-do
Plan your week
- Read Chapter 13 (about 50 minutes), then the lecture and slides.
- Work the lecture tutorial (60–90 minutes) and the practice set (about 20 minutes).
- Do the Business Case Workshop (about 90 minutes), the discussion, and the assignment.
- Take the quiz.
This week's checkpoint: show why the cart earned 9,000 dollars but its cash rose only 2,000.
You've got this
Take it in order, and ask your instructor if a step snags.
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