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Students learn about financial accounting ratio analysis.

 

 

ACCOUNTING BASICS:

RATIO ANALYSIS

Topic:  Use ratio analysis to analyze financial statements.

Concept:   An introduction to financial statement analysis using the various ratios on and between the balance sheet and income statement.

Objectives 

  • Outline importance of analyzing financial statements
  • Introduce solvency ratios
  • Present rations to determine operational efficiency
  • Explain trend analysis using horizontal and vertical analysis

Suggested Grades:

Seventh Grade - Eighth Grade - Ninth Grade - Tenth Grade - Eleventh Grade - Twelfth Grade - College - Adult Education

 
 

 

 

RATIO ANALYSIS LESSON PLAN

 

Teaching Materials


Lesson Activity

  1. Discuss ratio analysis

    Why is it done?
     

  2. Introduce financial structure analysis

    Debt to equity ratio

    Go through example
     
  3. What do ratios tell us

    discuss that there is no “right” ratio to achieve

    discuss ratio stability

    discuss direction of change in the ratio
     

  4. Introduce solvency ratios

    discuss solvency in general

    go through examples of each ratio
     
  5. Introduce operational efficiency ratios

    discuss what efficiency refers to

    discuss what the term “return” means

    work through examples of each ratio
     

  6. Introduce trend analysis

    present horizontal analysis

    present vertical analysis

 

 

 

Lesson Printable Materials - Worksheets

Print out the teaching lesson pages and exercise worksheets for use with this lesson:

 

RATIO ANALYSIS LESSON

Ratio Analysis Lesson *

This is a lesson and worksheet on ratio analysis.

 

 

 
 

 

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