Lesson Plan

• Apply key profitability, liquidity, efficiency and solvency ratios to compare two firms in the same industry.
• Interpret the ratio results to identify each firm’s strengths, weaknesses and financial risk.
• Communicate a reasoned judgement and suggest actions for the weaker performer.

• Projector and screen
• Printed handouts of Alpha Ltd and Beta Ltd financial statements
• Calculators (or spreadsheet software)
• Worksheet with ratio formulas and blank comparative table
• Whiteboard and markers
• Exit‑ticket slips

Begin with a quick question: “Why do investors compare companies before buying shares?” Connect to students’ prior knowledge of profit and liquidity ratios. Explain that today they will use those ratios to benchmark two real firms and be assessed on the accuracy of their calculations and the quality of their analysis.

1. Do‑now (5'): Students list the five categories of ratios from memory on a sticky note.
2. Mini‑lecture (10'): Review each ratio category, show formulas on the board, and highlight common pitfalls.
3. Guided calculation (15'): Using the handouts, students compute GPM, NPM, CR, QR, ROCE and DER for Alpha Ltd and Beta Ltd with calculator support.
4. Group comparative table (10'): Teams fill a pre‑formatted table with their results and calculate percentage differences.
5. Analysis discussion (10'): Each group identifies which firm performs better on each ratio and proposes reasons, referencing the “Key Points for Students”.
6. Summary & exit ticket (5'): Whole‑class recap of findings; students write one actionable recommendation for the weaker firm on an exit‑ticket slip.

Recap the steps from data collection to interpretation and emphasise the importance of consistent time periods and industry benchmarks. Collect exit tickets as a quick retrieval check. For homework, assign students to select two competing firms of their choice, gather the latest statements, and compute the same set of ratios.