Lesson Plan

• Define the current ratio and write its formula.
• Calculate the current ratio using balance‑sheet figures.
• Interpret the ratio to assess a company’s short‑term liquidity.
• Identify common mistakes when computing the ratio.
• Apply the ratio to different scenarios and discuss trends.

• Projector or interactive whiteboard
• Printed worksheet with balance‑sheet data (ABC Ltd. example)
• Calculators
• Whiteboard markers and eraser
• Sample practice questions handout
• Bar‑chart template for visualising assets vs. liabilities

Begin with a quick poll: “What would you do if your business could not pay its bills next month?” Connect responses to the need for liquidity measures. Review the concept of current assets and liabilities from the previous lesson. State that today students will master the current ratio and learn how to interpret it.

1. Do‑now (5’): Students calculate a simple ratio from a mini‑data set on the board.
2. Direct Instruction (10’): Explain the definition, formula, and components of the current ratio using the projector.
3. Guided Practice (15’): Work through the ABC Ltd. example together, highlighting each step of identification, calculation, and interpretation.
4. Common Mistakes (5’): Show typical errors and ask students to correct a faulty calculation.
5. Independent Practice (12’): Students complete three practice questions from the handout, circulating for support.
6. Check for Understanding (5’): Quick exit ticket: “State one thing the current ratio tells you about a business.”
7. Wrap‑up (3’): Summarise key points and preview the next ratio (quick ratio).

Recap the formula, calculation steps, and how to read the result against industry norms. Collect exit tickets to gauge understanding and assign a short homework: calculate the current ratio for a provided balance sheet and write a brief comment. Remind students that the ratio is a diagnostic tool, not a definitive measure of business health.