{"id":28,"date":"2025-10-04T12:35:51","date_gmt":"2025-10-04T11:35:51","guid":{"rendered":"http:\/\/ecourse.co.uk\/8135\/?p=28"},"modified":"2025-10-13T00:29:16","modified_gmt":"2025-10-12T23:29:16","slug":"week-3","status":"publish","type":"post","link":"https:\/\/ecourse.uk\/8135\/?p=28","title":{"rendered":"Week 3b [4\/24] [CORE]: Liquidity"},"content":{"rendered":"<p><strong><img loading=\"lazy\" decoding=\"async\" class=\"\" src=\"https:\/\/ecourse.uk\/2000\/wp-content\/uploads\/2021\/11\/moneybags.jpg\" width=\"683\" height=\"348\" \/><\/strong><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Lecture_notes\" >Lecture notes<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Introduction_to_interpretation\" >Introduction to interpretation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Liquidity\" >Liquidity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Tesco_plc\" >Tesco plc<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Course_video_An_introduction_to_the_Statement_of_Cash_Flows\" >Course video: An introduction to the Statement of Cash Flows<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Study_hint\" >Study hint<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Additional_resources_ADD\" >Additional resources [ADD]<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#A_case_study_for_you_to_try_CORE\" >A case study for you to try [CORE]<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Directed_Private_Study_CORE\" >Directed Private Study [CORE]<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/ecourse.uk\/8135\/?p=28\/#Supportive_reading_ADD\" >Supportive reading [ADD]<\/a><\/li><\/ul><\/nav><\/div>\n<h4><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Having looked (albeit briefly!) at the format and content of the main financial statements we&#8217;ll now start looking at the usefulness of the statements, in particular to investors.<\/p>\n<p>This week we will look at:<\/p>\n<p>a) how accounting data is made up of two components &#8211; an economic event and a measurement<br \/>\nb) how an individual figure is not very meaningful by itself &#8211; we need to make comparisons<br \/>\nc) liquidity. Liquidity is important because it is of paramount importance during an economic crisis, and because it is the main reason for businesses failing.<\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Lecture_notes\"><\/span><strong>Lecture notes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>The lecture notes (in pdf format) for this week are available:<\/p>\n<ul>\n<li>\n<h5><span class=\"ez-toc-section\" id=\"Introduction_to_interpretation\"><\/span><span style=\"color: #003366;\"><a style=\"color: #003366;\" href=\"http:\/\/ecourse.co.uk\/interpretation\/interpretation1.pdf\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Introduction to inter<\/strong><strong>pretation<\/strong><\/a><\/span><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<\/li>\n<li>\n<h5><span class=\"ez-toc-section\" id=\"Liquidity\"><\/span><strong><a href=\"http:\/\/www.ecourse.co.uk\/interpretation\/interpretation_liquidity_2025.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Liquidity<\/a><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<\/li>\n<\/ul>\n<h5><span class=\"ez-toc-section\" id=\"Tesco_plc\"><\/span>Tesco plc<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>We&#8217;ll relate the ideas covered in the lecture to the most recent financial statements of <strong><a href=\"https:\/\/www.tescoplc.com\/media\/ky0bfwpo\/tesco_ar25_interactive.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Tesco<\/a><\/strong>.<\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Course_video_An_introduction_to_the_Statement_of_Cash_Flows\"><\/span><a href=\"https:\/\/youtu.be\/SdqPW19ZLFg\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Course video: An introduction to the Statement of Cash Flows<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><iframe loading=\"lazy\" title=\"Company Accounts: an introduction to the Statement of Cash Flows\" width=\"600\" height=\"338\" src=\"https:\/\/www.youtube.com\/embed\/SdqPW19ZLFg?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Study_hint\"><\/span><strong>Study hint<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>It might be a good idea to <strong>print out the lecture notes<\/strong>. We will be adding calculations and additional notes based on Tesco&#8217;s financial statements.<\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Additional_resources_ADD\"><\/span><strong>Additional resources [ADD]<br \/>\n<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>FRC Reporting Lab: <strong><a href=\"https:\/\/bit.ly\/2JQZKB5\" target=\"_blank\" rel=\"noopener noreferrer\">Disclosures on the sources and uses of cash<\/a><\/strong><\/p>\n<p><strong><a href=\"https:\/\/www.icaew.com\/technical\/business-and-management\/financial-management\/covid-19-nine-principles-for-finance-professionals\" target=\"_blank\" rel=\"noopener\">COVID-19: nine principles for finance professionals &#8211; adapting cash flow processes, analysis and forecasting<\/a><\/strong><\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"A_case_study_for_you_to_try_CORE\"><\/span><strong>A case study for you to try [CORE]<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><strong><a href=\"http:\/\/ecourse.co.uk\/qmondrayne.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">Mondrayne plc<\/a><\/strong> [a question from a previous exam]. A suggested solution is <strong><a href=\"http:\/\/ecourse.co.uk\/smondrayne.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">here<\/a>.<\/strong><\/p>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Directed_Private_Study_CORE\"><\/span><strong>Directed Private Study [CORE]<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Read the study notes for the lecture; research any issues you find difficult.<\/p>\n<p>Browse the supportive reading as appropriate. Browse the internet for current material in which liquidity is an issue.<\/p>\n<p>Continuously review your understanding of liquidity ratios. Pay particular attention to the ideas that:<\/p>\n<ul>\n<li><em>changes<\/em> in liquidity ratios over time may be more important than\u00a0<em>absolute values<\/em>. Resolve\u00a0<em><strong>never<\/strong><\/em><strong>\u00a0<\/strong>to use benchmark values for liquidity ratios e.g. never write\/say &#8216;the ideal working capital ratio is &#8230;.&#8217;.<\/li>\n<li>The cash flow statement is more important that liquidity ratios<\/li>\n<li>It might be possible to &#8216;optimise&#8217; liquidity ratios. How?<\/li>\n<li>Financial statements are historical and liquidity problems can arise quite quickly.<\/li>\n<li>Liquidity problems are not just being &#8216;short of cash&#8217;; it also means that the entity cannot easily solve things by borrowing more\/selling unessential assets. Increasing borrowing increases gearing (and hence financial risk) and may be expensive (higher interest charges).<\/li>\n<\/ul>\n<hr \/>\n<h4><span class=\"ez-toc-section\" id=\"Supportive_reading_ADD\"><\/span><strong>Supportive reading [ADD]<br \/>\n<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Lance Moir: Managing Corporate Liquidity, Google\u00a0<strong><a href=\"http:\/\/books.google.co.uk\/books?id=OW4Lwp8WL4UC&amp;printsec=frontcover&amp;dq=liquidity&amp;hl=en&amp;ei=zfa4TvatM8qohAfz-4SaBw&amp;sa=X&amp;oi=book_result&amp;ct=result&amp;resnum=1&amp;ved=0CC4Q6AEwAA#v=onepage&amp;q&amp;f=false\" target=\"_blank\" rel=\"noopener noreferrer\">ebook<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction Having looked (albeit briefly!) at the format and content of the main financial statements we&#8217;ll now start looking at the usefulness of the statements, in particular to investors. This week we will look at: a) how accounting data is made up of two components &#8211; an economic event and a measurement b) how an [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2,3,4],"tags":[],"class_list":["post-28","post","type-post","status-publish","format-standard","hentry","category-elearning","category-lectures","category-media"],"_links":{"self":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/28","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28"}],"version-history":[{"count":25,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/28\/revisions"}],"predecessor-version":[{"id":1972,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/28\/revisions\/1972"}],"wp:attachment":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}