Lesson Plan

Resources → Subject Notes → Business → Notes
Lesson Plan
Grade: Date: 17/01/2026
Subject: Business
Lesson Topic: acid test ratio: calculation and interpretation
Learning Objective/s:
  • Describe the purpose of the acid test (quick) ratio in assessing short‑term liquidity.
  • Calculate the acid test ratio from published balance‑sheet figures.
  • Interpret acid test ratio results and compare them with the current ratio.
  • Evaluate the limitations of the ratio and consider industry context.
  • Apply the ratio in an exam‑style question using a structured checklist.
Materials Needed:
  • Projector or interactive whiteboard
  • Printed balance‑sheet extracts (e.g., XYZ Ltd. example)
  • Calculator or spreadsheet software
  • Worksheet with formula template and checklist
  • Whiteboard markers and erasers
  • Handout summarising formula, components, and interpretation guide
 Introduction:
Begin with a quick poll: how many students have heard of the “quick ratio”. Connect this to prior learning on the current ratio and explain that today they will explore a stricter liquidity test. State that by the end of the lesson they will be able to calculate, interpret, and critique the acid test ratio in exam questions.
Lesson Structure:
  1. Do‑now (5’) – short quiz on current‑ratio concepts to activate prior knowledge.
  2. Mini‑lecture (10’) – introduce the acid test ratio, formula and components using the projector.
  3. Guided calculation (12’) – walk through the XYZ Ltd. example; students complete the worksheet.
  4. Interpretation discussion (8’) – groups analyse the result, compare with the current ratio and discuss limitations.
  5. Practice exam question (10’) – individual work on a checklist‑style question, followed by peer checking.
  6. Summary & check for understanding (5’) – teacher reviews key points and answers remaining queries.
Conclusion:
Recap the steps for calculating and interpreting the acid test ratio and its relevance to analysts and lenders. Students complete an exit ticket stating one insight and one limitation of the ratio. For homework, they locate a real company’s balance sheet, compute its acid test ratio, and prepare a brief interpretation.