Class: Senior Secondary School 2 (SS2 / SSS 2)
Term: 1st Term
Week: 12
Age: 16 years
Duration: 45 minutes
Subject: Store Management
Curriculum Theme: Financial Management in Stores
Previous Lesson: Final Accounts: Balancing and Importance of Balance Sheet.
Topic: Sales Turnover
Subject Matter: Meaning of sales turnover (total sales within a period), meaning of rate of turnover, items used to calculate rate of turnover (opening stock, closing stock, average stock, cost of goods sold), calculation of opening stock, calculation of closing stock, calculation of average stock, calculation of cost of goods sold, calculation of percentage gross profit to turnover, calculation of percentage net profit to turnover, calculation of percentage net profit to capital investment.

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Define sales turnover and rate of turnover.
Identify the items used in calculating sales turnover and related percentages.
State the formulas for calculating average stock, cost of goods sold, and various profit percentages.
Calculate average stock, cost of goods sold, and different profit percentages.

Affective Domain:

Appreciate the importance of analyzing sales turnover for store performance.
Show willingness to participate in problem-solving activities related to sales turnover.

Psychomotor Domain:

Accurately solve problems involving sales turnover and profit percentage calculations.
Prepare simple statements showing turnover and profit ratios.

Engage in collaborative learning by discussing calculation methods with peers.

Reference Materials

The following resources were used in planning this lesson:

Senior Secondary Schools Education Curriculum
State Unified Scheme of Work
Egwuatu, A. (2018). Comprehensive Store Management for Senior Secondary Schools. Abuja: Learnwell Publishers.

Instructional Materials

The teacher will teach this lesson with the aid of:

Chart showing calculation of rate of turnover.
Chart showing closing stock, average stock, and cost of goods sold calculations.
Whiteboard and markers.
Calculators.

Rationale for the Lesson

This lesson helps pupils understand how to measure a store’s sales performance and efficiency in managing inventory. Understanding sales turnover and profit percentages enables pupils to analyze the financial health and operational effectiveness of a business.

Prerequisite/Previous Knowledge

Pupils have basic knowledge of business terms such as sales, purchases, stock, and profit from previous lessons in Commerce or Business Studies.

Lesson Content/Board Summary

Sales Turnover

Meaning of Sales Turnover

Sales turnover refers to the total value of goods sold by a business within a specific period, usually a financial year. It represents the total revenue generated from sales before deducting any expenses.

Meaning of Rate of Turnover (Stock Turnover Ratio)

The rate of turnover, also known as stock turnover ratio, measures how quickly a business sells and replaces its inventory over a given period. A higher rate generally indicates efficient inventory management and higher sales.

Items Used to Calculate Sales Turnover and Related Ratios

Opening Stock: The value of goods remaining unsold at the beginning of an accounting period.
Closing Stock: The value of goods remaining unsold at the end of an accounting period.
Purchases: The total value of goods bought by the business for resale during the accounting period.
Cost of Goods Sold (COGS): The direct costs attributable to the production of the goods sold by a company.
Sales: The total revenue from goods sold.
Operating Expenses: Expenses incurred in the day-to-day running of the business (e.g., salaries, rent).
Capital Investment: The total amount of money invested in the business.

Formulas and Calculations

1. Average Stock:

Average Stock = (Opening Stock + Closing Stock) / 2

2. Cost of Goods Sold (COGS):

COGS = Opening Stock + Purchases – Closing Stock

3. Gross Profit:

Gross Profit = Sales – Cost of Goods Sold

4. Net Profit:

Net Profit = Gross Profit – Operating Expenses

5. Rate of Stock Turnover:

Rate of Stock Turnover = Cost of Goods Sold / Average Stock

Alternatively: Rate of Stock Turnover = Sales / Average Stock (if using sales value)

6. Percentage Gross Profit to Turnover:

Percentage Gross Profit to Turnover = (Gross Profit / Sales Turnover) x 100%

7. Percentage Net Profit to Turnover:

Percentage Net Profit to Turnover = (Net Profit / Sales Turnover) x 100%

8. Percentage Net Profit to Capital Investment:

Percentage Net Profit to Capital Investment = (Net Profit / Capital Investment) x 100%

Worked Examples

Example 1: Calculation of COGS, Average Stock, and Rate of Stock Turnover

A store has the following data for the year:

Opening Stock: N50,000
Closing Stock: N30,000
Purchases: N120,000
Sales: N180,000

Calculate the Cost of Goods Sold, Average Stock, and Rate of Stock Turnover.

Solution:

Step 1: Calculate Average Stock.

Average Stock = (Opening Stock + Closing Stock) / 2

Average Stock = (N50,000 + N30,000) / 2 = N80,000 / 2 = N40,000

Step 2: Calculate Cost of Goods Sold (COGS).

COGS = Opening Stock + Purchases – Closing Stock

COGS = N50,000 + N120,000 – N30,000 = N170,000 – N30,000 = N140,000

Step 3: Calculate Rate of Stock Turnover.

Rate of Stock Turnover = COGS / Average Stock

Rate of Stock Turnover = N140,000 / N40,000 = 3.5 times

Example 2: Calculation of Profit Percentages

Using the data from Example 1, assume Operating Expenses were N25,000 and Capital Investment was N200,000. Calculate Gross Profit, Net Profit, Percentage Gross Profit to Turnover, Percentage Net Profit to Turnover, and Percentage Net Profit to Capital Investment.

Solution:

Step 1: Calculate Gross Profit.

Gross Profit = Sales – COGS

Gross Profit = N180,000 – N140,000 = N40,000

Step 2: Calculate Net Profit.

Net Profit = Gross Profit – Operating Expenses

Net Profit = N40,000 – N25,000 = N15,000

Step 3: Calculate Percentage Gross Profit to Turnover.

Percentage Gross Profit to Turnover = (Gross Profit / Sales Turnover) x 100%

Percentage Gross Profit to Turnover = (N40,000 / N180,000) x 100% = 22.22% (approx.)

Step 4: Calculate Percentage Net Profit to Turnover.

Percentage Net Profit to Turnover = (Net Profit / Sales Turnover) x 100%

Percentage Net Profit to Turnover = (N15,000 / N180,000) x 100% = 8.33% (approx.)

Step 5: Calculate Percentage Net Profit to Capital Investment.

Percentage Net Profit to Capital Investment = (Net Profit / Capital Investment) x 100%

Percentage Net Profit to Capital Investment = (N15,000 / N200,000) x 100% = 7.5%

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and reviews the previous lesson on inventory control. The teacher then introduces the new topic, Sales Turnover, by asking pupils how a store measures its success.
Pupils’ Activity: Pupils respond to questions and listen attentively to the introduction.
Learning Point: Pupils recall prior knowledge and are introduced to the topic of sales turnover.

Step 2: Meaning of Sales Turnover and Rate of Turnover

Time: 5 minutes
Teaching Skill: Explanation/Definition
Teacher’s Activity: The teacher explains the meaning of sales turnover as total sales within a period and the meaning of rate of turnover as how quickly stock is sold and replaced. The teacher uses the chart on turnover to illustrate.
Pupils’ Activity: Pupils listen, take notes, and ask questions for clarification.
Learning Point: Pupils understand the core definitions of sales turnover and rate of turnover.

Step 3: Items Used in Calculation

Time: 10 minutes
Teaching Skill: Listing/Explanation
Teacher’s Activity: The teacher lists and explains the items used to calculate sales turnover and related ratios, such as opening stock, closing stock, purchases, cost of goods sold, sales, operating expenses, and capital investment. The teacher refers to the relevant chart.
Pupils’ Activity: Pupils identify and write down the items and their explanations.
Learning Point: Pupils identify the components required for turnover and profit calculations.

Step 4: Calculation of Average Stock and Cost of Goods Sold

Time: 10 minutes
Teaching Skill: Demonstration/Problem-solving
Teacher’s Activity: The teacher guides pupils through the formulas and step-by-step calculations for average stock and cost of goods sold, using the worked example from the board summary. The teacher ensures pupils understand each step.
Pupils’ Activity: Pupils copy the formulas and worked examples, and attempt to solve similar problems.
Learning Point: Pupils learn how to calculate average stock and cost of goods sold.

Step 5: Calculation of Percentage Gross Profit to Turnover

Time: 5 minutes
Teaching Skill: Demonstration/Problem-solving
Teacher’s Activity: The teacher demonstrates the calculation of gross profit and then guides pupils through the calculation of percentage gross profit to turnover using the second worked example from the board summary.
Pupils’ Activity: Pupils follow the demonstration, ask questions, and practice the calculation.
Learning Point: Pupils learn to calculate gross profit and its percentage relative to sales turnover.

Step 6: Calculation of Percentage Net Profit to Turnover and Capital Investment

Time: 5 minutes
Teaching Skill: Demonstration/Problem-solving
Teacher’s Activity: The teacher demonstrates the calculation of net profit and then guides pupils through the calculation of percentage net profit to turnover and percentage net profit to capital investment, continuing with the second worked example.
Pupils’ Activity: Pupils observe, participate, and complete the calculations in their notebooks.
Learning Point: Pupils learn to calculate net profit and its percentages relative to sales turnover and capital investment.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Define sales turnover.
State the formula for calculating Cost of Goods Sold (COGS).
If opening stock is N60,000, closing stock is N40,000, and purchases are N150,000, calculate the Cost of Goods Sold.
Using the COGS from question 3 and sales of N200,000, calculate the Gross Profit.

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 5 minutes
Teaching Skill: Summarization/Assignment
Teacher’s Activity: The teacher summarizes the key learning points on sales turnover and profit percentage calculations. The teacher then gives an assignment for pupils to practice more calculations from their textbooks.
Pupils’ Activity: Pupils listen to the summary and copy down the assignment.
Learning Point: Pupils consolidate their understanding and are given tasks for further practice.

Lesson Keywords

Sales Turnover – The total value of goods sold by a business within a specific period.
Rate of Turnover – A measure of how quickly a business sells and replaces its inventory.
Opening Stock – Value of goods at the beginning of an accounting period.
Closing Stock – Value of goods at the end of an accounting period.
Cost of Goods Sold (COGS) – Direct costs of producing the goods sold.
Gross Profit – Revenue less Cost of Goods Sold.
Net Profit – Gross Profit less Operating Expenses.
Capital Investment – Total money invested in a business.

Differentiation

The teacher will provide additional support to struggling pupils by offering simpler examples and one-on-one guidance. Advanced pupils will be challenged with more complex problems requiring multi-step calculations and encouraged to explore real-world company financial statements.

Note for teachers using this lesson plan

Teachers should ensure pupils have a strong grasp of basic arithmetic and percentage calculations before starting this lesson. Emphasize the practical application of these calculations in business decision-making. Encourage the use of calculators and provide sufficient practice exercises.