Activities to Use When Teaching Profit and Loss
Students learn about profit and loss through trial-and-error experiences with budgeting for expenses and tracking revenues in mock or actual business ventures. As students keep track of earnings and costs, they also learn to analyze the factors influencing profitability and can suggest changes to increase revenues or cut expenses.
1 Stock Market Game
Divided into groups, student teams are given a set amount of virtual capital to invest over several weeks. Students research stocks using online or newspaper sources to decide what companies they would like to invest in, and choose stocks to purchase at the set price. Each day, students use the newspaper or Internet to track the value of their stock and calculate whether they have made or lost money. Students can also sell stock to make a profit or take a loss. The game can easily become a competition as groups seek to make the greatest profit by a specific deadline.
2 Class Business
This long-term project introduces students to entrepreneurship as well as the financial and marketing aspects of business. Students may decide to create and sell a product, such as lemonade or keychains, or sell a service such as tutoring younger students. They delegate the various tasks of managing their business and may also seek investments from partners whom they will eventually pay back. Students will be motivated to manage their expenses and tweak the business plan to increase profitability.
3 Budget Tracking
Students track their spending and earnings over a given period, taking into consideration income from allowances and job wages and expenses related to transportation, food and entertainment. They analyze their budget, looking for patterns in their spending habits, and identify where they could reduce their expenses, whether by using coupons or choosing less expensive recreational choices. Given their current spending habits, students make projections for their financial future.
4 Raising Funds for a Cause
Fundraising gives students the opportunity to learn financial terms and organizational skills. Students may decide to sell a product, ask for donations from community members, collect cans or rake leaves to raise money. As students put their plan into action, they are responsible for tracking the money they have spent and the funds they have generated to determine whether the fundraising initiative resulted in a profit or a loss. Students may also get marketing experience by designing posters related to the fundraiser and help generate school and community awareness for the chosen cause.