Objectives:
- Students will be able to define liquidity and solvency and explain their importance in assessing a company's financial health.
- Students will be able to calculate and interpret financial ratios related to liquidity and solvency, including working capital, current ratio, quick ratio, cash ratio, inventory turnover, accounts receivable turnover, and operating cycle.
- Students will be able to analyze accounting data and draw conclusions about a company's financial condition and operating results.
Age Level: Late secondary school/junior college
National Standards: Complies with NBEA Accounting 2023 Standard IV.3.3 Assess liquidity and solvency by calculating and interpreting financial ratios (e.g., working capital, current ratio, quick ratio, cash ratio, inventory turnover, accounts receivable turnover, operating cycle).
Materials:
- Whiteboard
- Markers
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