Lesson Plan

• Calculate gross profit margin, profit margin, and ROCE using given financial data.
• Interpret each ratio to assess business efficiency, cost control, and capital utilisation.
• Compare calculated ratios with industry benchmarks and explain implications for managers, investors and lenders.

• Projector and screen
• Whiteboard and markers
• Printed worksheets with practice questions
• Calculator or spreadsheet software
• Handout of ratio formulas and interpretation guide
• Sample financial statements (real or simulated)

Begin with a quick discussion: why do managers and investors care about how much profit a business makes from its sales and capital? Review the previous lesson on basic profit‑and‑loss statements. Today students will learn to compute three key profitability ratios and understand what the results reveal about business performance.

1. Do‑Now (5') – Short quiz on profit and loss components.
2. Mini‑lecture (10') – Introduce formulas for Gross Profit Margin, Profit Margin, and ROCE with brief examples.
3. Guided practice (15') – Work through the example calculations from the notes together on the board.
4. Independent worksheet (15') – Students calculate the three ratios for a new data set using calculators.
5. Pair check & discussion (10') – Pairs compare answers, interpret results, and relate to industry benchmarks.
6. Exit ticket quiz (5') – One interpretation question to assess understanding.

Summarise how each ratio provides insight into different aspects of profitability and capital efficiency. Ask students to write one key takeaway on a sticky note as an exit ticket. For homework, assign additional practice problems and a brief reflection on how changing one input (e.g., costs) would affect the ratios.