St. Vincent’s High School, Inc.

La Castellana, Negros Occidental

LEARNING PLAN

TIME FRAME: August 19-23, 2024

SUBJECT MATTER: BUSINESS FINANCE
Unit 2: Financial Statement: A Review
TOPIC / LESSON NAME Lesson 2.1 Preparing Financial Statements
Lesson 2.2 Financial Ratios: Liquidity
Lesson 2.3 Financial Ratios: Profitability
The learner demonstrates an understanding of:
 the process of preparing financial statements as well as the methods or tools of analysis of financial statements, including
CONTENT STANDARDS
horizontal analysis, vertical analysis, and financial ratios to test the level of liquidity, solvency, profitability, and stability of
the business

The learners shall be able to:

PERFORMANCE STANDARDS  solve exercises and problems that require financial statement preparation, analysis, and interpretation using horizontal
and vertical analyses and various financial ratios
 Prepare financial statements (ABM_BF12-IIIb-6).
 Define the measurement levels, namely, liquidity, solvency, stability, and profitability (ABM_BF12-IIIb-7).
LEARNING COMPETENCIES
 Define the measurement levels, namely, liquidity, solvency, stability, and profitability (ABM_BF12-IIIb-7).

2.1
 Identify the types of financial statements and their components.
 Prepare a simple balance sheet, statement of income, and statement of financial flows.
 Explain the importance of financial statements to financial management
2.2
SPECIFIC LEARNING OUTCOMES  Define financial ratio and liquidity ratio.
 Differentiate the categories of financial and liquidity ratios.
 Assess the relevance of liquidity ratios in the real business settings.
2.3
 Explain the definition, uses, and limitations of profitability ratios.
 Calculate profitability ratios.
 Interpret the performance of a business using the profitability ratio.
TIME ALLOTMENT 240 minutes
LESSON OUTLINE:

A. Introduction: Pre-Test
B. Motivation: Quick Look (Classifying Assets, Liabilities, and Equity)
C. Instruction/Delivery: (Discussion)
D. Practice: Individual Activity (Let’s Practice)
E. Enrichment: Recap of the lesson
F. Evaluation: Quipper Quiz

MATERIALS laptop, TV, Quipper Study Guide

RESOURCES Link.quipper.com-

PROCEDURE MEETING THE

LEARNERS’ NEEDS

INTRODUCTION Teacher Tip:

Pre-Test
*Begin with a
review about the
MOTIVATION:
previous lesson
Classifying Assets, Liabilities, and Equity
and connect it to
In starting a business, you need to give importance to financial statements. The data on these documents may be overwhelming but they are highly
today’s lesson.
important to monitor the company's financial status. You may begin by classifying the assets, liabilities, and equity of the company. These are needed in
preparing the balance sheet.

From your learnings in your accounting subject, classify each item as assets, liabilities, or equity by placing it in the appropriate column. * Encourage
1. cash students to
2. owner’s equity participate in the
3. rent payable activities and
4. building make them realize
5. office supplies the importance of
6. accounts payable it
7. dividends
8. accounts receivable
9. property and equipment *Make sure that
10. income taxes payable the evaluation and
other
Assets Liabilities Equity
performance tasks
align with the
learning
competencies.
Questions to Ponder

1. How do you determine if an item is an asset, liability or equity?

2. Why is it important to classify accounts correctly?
3. What do you think is the best way to prepare financial statements?

DISCUSSION:
Lesson 2.1
A. Financial Statements
B. Balance Sheet
 Preparing the Balance Sheet
 Data from a Balance Sheet
C. Income Statement
 Preparing the Income Statement
 Data from Income Statement
D. Statement of Cash Flows
 Preparing the Statement of Cash Flows
 Data from Statement of Cash Flows

Lesson 2.2
A. Financial Ratio
 Ratio Analysis
B. Categories of Financial ratio
  Liquidity Ratios
 Profitability Ratio
 Efficiency Ratios
 Solvency Ratios
Lesson 2.3
A. Profitability Ratios
 Margin Ratio
.1 Gross Profit
.2 Operating Profit
.3 EBITDA
.4 Net Profit
 Return Ratio
.1 Return on assets
.2 Return on equity
.3 Return on investment capital

PRACTICE:
Lesson 2.1
True or False
1. Net income is revenue plus total expenses.
2. Balance sheet shows what the company owns and owes
3. Current liabilities are financial debt that must be settled within two years.
4. To obtain gross margin, subtract the total cost of goods sold from the total revenue.
5. Financing activities refer to the acquisition of long-term investment such as capital expenditure.

Practice Your Skills

Prepare an Income Statement using the following information.
Lesson 2.2
True or False
1. The quick ratio gives a lower value than the value of the current ratio.
2. A liquidity ratio lower than 1 indicates a company’s good financial standing.
3. Operating cash flow ratio is one of the solvency ratios
4. Liquidity ratio is used to determine the financial stability of a company.
5. A tool used to determine the financial ratios are the financial instruments.

Practice Your Skills

Analyze the given data

1. Looking at the total current assets and the total current liabilities, what can you say about the two companies?

2. Determine the quick ratios of the two companies. Who do you think has a better financial standing? Why?

Lesson 2.3
Identify the concept described.
1. It measures the financial well-being of a company
2. It indicates a company’s ability to turn sales into profits.
3. It indicates a company’s ability to generate returns to its shareholders.
4. It determines the profit a business generates from its operations.
5. It assesses a company’s efficiency in allocating capital to profitable investments.
Practice Your Skills

ABC Automobile Parts Store summarized its financial statement. Compute for the following ratios:

1. gross profit margin

2. operating profit margin

3. net profit margin

4. return on assets

5. return on equity

ENRICHMENT
Recap of the lesson

Lesson 2.1
A. Financial Statements
B. Balance Sheet
 Preparing the Balance Sheet
 Data from a Balance Sheet
C. Income Statement
 Preparing the Income Statement
 Data from Income Statement
D. Statement of Cash Flows
 Preparing the Statement of Cash Flows
 Data from Statement of Cash Flows

Lesson 2.2
A. Financial Ratio
 Ratio Analysis
B. Categories of Financial ratio
  Liquidity Ratios
 Profitability Ratio
 Efficiency Ratios
 Solvency Ratios

Lesson 2.3
A. Profitability Ratios
 Margin Ratio
.1 Gross Profit
.2 Operating Profit
.3 EBITDA
.4 Net Profit
 Return Ratio
.1 Return on assets
.2 Return on equity
.3 Return on investment capital

Evaluation
Quipper Quiz