Lesson Plan

• Describe the main problems that prevent direct financial comparison between firms.
• Explain how differences in accounting policies, year‑ends, size, inflation, currency and tax affect comparability.
• Apply common‑size and ratio techniques to adjust figures for a meaningful inter‑firm comparison.
• Evaluate adjustments and justify assumptions when presenting comparative analysis.

• Projector or interactive whiteboard
• Printed handout of the illustrative comparison table
• Sample financial statements of two firms (different policies, currencies)
• Calculator or spreadsheet software
• Worksheet with common‑size ratio exercises

Begin with a quick poll: “When choosing between two companies to invest in, what information would you compare?” Connect this to prior learning on reading profit‑and‑loss accounts and balance sheets. Explain that today’s success criteria are to identify comparison problems and to demonstrate at least one adjustment technique.

1. Do‑now (5') – Students list three reasons firms are compared; share answers.
2. Mini‑lecture (10') – Present the nine common problems (policy, year‑end, size, inflation, currency, industry, tax, presentation, estimates) with real‑world examples.
3. Group activity (15') – Using the sample statements, each group identifies at least three problems and proposes appropriate adjustments; record on worksheet.
4. Demonstration (10') – Teacher shows how to create a common‑size income statement and calculate profit‑margin ratios in the spreadsheet.
5. Guided practice (10') – Students convert a set of figures to a common currency and recalculate depreciation using a single method.
6. Check for understanding (5') – Quick quiz (exit ticket) with two scenarios: one asks for the main problem, the other for the correct adjustment.

Recap the key problems and the adjustment steps we practiced. Students complete an exit ticket summarising one problem and its adjustment. For homework, they must select two real companies, identify at least two comparison issues, and prepare a brief common‑size analysis.