Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Business
Lesson Topic: return on capital employed (ROCE): calculation and interpretation
Learning Objective/s:
  • Describe the purpose of ROCE as a profitability measure.
  • Calculate ROCE using operating profit and capital employed.
  • Analyse ROCE results by comparing to industry averages, historical trends and cost of capital.
  • Identify common distortions that can mislead ROCE interpretation.
  • Communicate findings of a ROCE analysis in a brief report.
Materials Needed:
  • Projector or interactive whiteboard
  • Printed worksheet with sample income statement & balance sheet
  • Calculator or spreadsheet software
  • Whiteboard markers
  • Example ROCE calculation handout
  • Bar‑chart template for comparison
 Introduction:
Begin with a quick poll: “Which financial ratio tells us how well a business turns its capital into profit?” Review that students already know about profit margins and asset turnover. Explain that today they will learn to compute and interpret Return on Capital Employed (ROCE) and will be able to assess whether a company creates value.
Lesson Structure:
  1. Do‑now (5') – short quiz on profit‑related ratios.
  2. Mini‑lecture (10') – introduce ROCE concept, formula, and relevance.
  3. Guided calculation (15') – using the worksheet, students work in pairs to obtain operating profit, determine capital employed, and compute ROCE.
  4. Interpretation activity (10') – compare the calculated ROCE with industry average and WACC; discuss potential distortions.
  5. Visualisation (5') – create a bar chart showing company ROCE versus industry and historical values.
  6. Check for understanding (5') – exit ticket: one sentence stating what a ROCE above the cost of capital indicates.
Conclusion:
Summarise that ROCE measures profit generated per pound of capital and that values above the cost of capital signal value creation. Ask students to write an exit ticket summarising the key interpretation. Assign homework to locate a real company's financial statements and compute its ROCE for the next lesson.