Lesson Plan

• Describe what gearing measures and why it matters for financial risk.
• Calculate gearing ratios using debt‑to‑equity and debt‑to‑capital formulas.
• Analyse how debt reduction, equity increase, asset‑base improvement and operational measures affect a company’s gearing.
• Evaluate the trade‑offs of each method and recommend an appropriate improvement plan.

• Projector or interactive whiteboard
• Printed worksheets with gearing calculations
• Calculator for each student
• Sample financial statements (real or simulated)
• PowerPoint slides summarising improvement methods
• Whiteboard and markers

Begin with a quick poll: “If your family business owed most of its money to a bank, how risky would that feel?” Connect this to prior learning on financial ratios and explain that today students will explore how businesses can lower that risk. Success criteria: accurately compute gearing ratios and propose realistic strategies to improve them.

1. Do‑now (5'): Students calculate gearing from a simple data set on the worksheet.
2. Mini‑lecture (10'): Review the two gearing formulas and their interpretation using the projector.
3. Guided practice (12'): Work through the example from the source, comparing debt‑to‑equity and debt‑to‑capital ratios.
4. Group activity (15'): Each group analyses a case study, selects two improvement methods, and justifies their choices.
5. Whole‑class debrief (8'): Groups present; teacher highlights key trade‑offs.
6. Exit ticket (5'): Students write one actionable step a business could take to improve its gearing.

Recap that improving gearing involves reducing debt, raising equity, or strengthening assets and operations, each with distinct trade‑offs. The exit ticket confirms each student’s chosen method for their case study. For homework, ask students to research a real company’s recent gearing ratio and suggest one improvement strategy.