Lesson Plan

• Define liquidity and explain its significance for business stability.
• Calculate current, quick, and cash ratios from balance‑sheet data.
• Interpret liquidity ratios in relation to industry norms and trends.
• Evaluate the limitations of liquidity ratios and their impact on decision‑making.

• Projector and screen
• Whiteboard and markers
• Printed balance‑sheet excerpt handout
• Calculator or spreadsheet software
• Worksheet with ratio calculation exercises
• Diagram of liquidity flowchart (optional)

Begin with a quick poll: how many have ever needed cash fast to pay a bill? Review that liquidity means turning assets into cash quickly, linking to prior lessons on cash flow. Today we’ll identify how liquidity ratios measure this ability and set success criteria to calculate and interpret three key ratios.

1. Do‑now (5’) – students answer a short question on why cash availability matters.
2. Mini‑lecture (10’) – define liquidity and introduce current, quick, cash ratios with formulas.
3. Guided example (15’) – work through the provided balance‑sheet data, calculate each ratio together.
4. Pair activity (10’) – students use a new handout to compute ratios for a different company and discuss findings.
5. Interpretation discussion (10’) – groups evaluate what the ratios indicate, considering industry context and limitations.
6. Quick check (5’) – exit ticket: write one limitation of liquidity ratios.

Summarise that liquidity ratios reveal a firm’s short‑term financial health but must be read with context. Collect exit tickets and remind students to complete a homework worksheet applying the ratios to a real‑world case study.