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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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