Lesson Plan

• Describe why banks are key external interested parties in accounting.
• Identify the financial statements and ratios banks use to assess creditworthiness.
• Calculate and interpret the current, quick, debt‑to‑equity, interest cover, and ROCE ratios.
• Explain the typical documents and steps involved in a bank loan application.
• Evaluate the purpose and impact of common loan covenants on a business.

• Projector or interactive whiteboard
• Printed handouts of balance sheet, profit & loss, and cash‑flow extracts
• Calculator worksheets for ratio calculations
• Sample loan application packet (forms, financial statements)
• Whiteboard markers and flip chart

Begin with a quick poll: which organisations rely most on a company’s financial statements? Explain that banks use these reports to decide whether to lend money, linking to prior learning about financial statements. Outline that by the end of the lesson students will be able to identify key information banks need, compute essential ratios, and describe the loan assessment process.

1. Do‑now (5') – Students match financial statements to their purpose for banks.
2. Mini‑lecture (10') – Overview of banks as interested parties and required loan documents.
3. Ratio workshop (15') – Guided calculation of five key ratios using sample data; peer check.
4. Loan application simulation (15') – Groups review a mock loan packet, identify documents, and outline the bank’s assessment steps.
5. Covenant analysis (10') – Discuss common covenants; students decide if a sample business meets them.
6. Exit ticket (5') – Write one ratio interpretation and one covenant implication.

Summarise how banks evaluate financial health through statements, ratios, and covenants, reinforcing the link to real‑world lending decisions. For the exit ticket, students submit one ratio interpretation and one covenant they would monitor. Assign homework to locate a recent news article about a bank rejecting a loan and write a brief analysis using the concepts learned.