Lesson Plan

• Describe what dividend cover measures and why it matters to investors.
• Apply the dividend‑cover formula to real published accounts.
• Interpret different dividend‑cover ratios and assess dividend sustainability.
• Identify limitations of dividend cover and explain how they affect analysis.
• Solve practice questions using the step‑by‑step calculation process.

• Projector and screen
• PowerPoint slides covering definition, formula and interpretation table
• Printed worksheets with the XYZ Ltd example and practice questions
• Calculators (or spreadsheet access)
• Handout of the dividend‑cover interpretation guide
• Whiteboard and markers

Begin with a quick poll: “If a company’s dividend is higher than its profit, what might happen?” Connect this to prior knowledge of profit and dividends, then outline today’s success criteria – students will calculate dividend cover, interpret the result, and recognise its limits.

1. Do‑now (5’) – Students answer two recall questions on profit, dividends and why investors track them.
2. Mini‑lecture (10’) – Define dividend cover, present the formula, and show the interpretation table on screen.
3. Guided calculation (15’) – Using the XYZ Ltd data, students work in pairs to compute dividend cover; teacher models each step.
4. Interpretation activity (10’) – Groups discuss what the calculated ratio (2.85×) indicates and list possible actions for the company.
5. Check for understanding (5’) – Exit ticket: give a new set of figures and ask students to calculate and comment on the cover.
6. Homework briefing (2’) – Assign the three practice questions from the source notes.

Recap the definition, formula and key interpretation thresholds. Collect exit tickets to gauge mastery and remind students to complete the practice questions for reinforcement.