Foundations of Small Business Finance

This unit introduces core financial management concepts for small businesses, including profit and loss, balance sheet relationships, sources of cash, liquidity and solvency, and basic budgeting and controls. Students will learn to read and communicate financial statements, build simple profit models, and evaluate how capital choices, taxation, and legal structure affect business value and cash flow.

Learning Objectives

• Analyze profit and loss and balance sheet statements to explain profit mechanics, reconcile profit versus cash flow, and differentiate financial statement presentation for service and product businesses
• Apply liquidity and solvency measurement tools (e.g., current ratio, quick ratio, debt-to-equity, cash flow analysis) and identify sources of cash to assess short-term liquidity needs and long-term solvency
• Demonstrate development of a basic budget and profit model, incorporating budgeting tools, system requirements, and internal control practices to produce timely and accurate profit-and-loss reporting
• Evaluate the impact of capital decisions, business legal structure, and income taxation on profit before tax, business valuation, and potential termination outcomes to recommend tax-aware financial strategies