… Flashcards
What is the formula for Revenue (Sales or Turnover)?
Selling price per unit x Number of units sold
How do you calculate Variable costs (Total variable costs)?
Variable cost per unit x Number of units sold
What is the formula for Total costs?
Fixed costs + Variable costs
How is Profit calculated?
Total revenue - Total costs OR Total contribution - Fixed costs
What is the formula for Market capitalisation of a business?
Number of issued shares x Current share price
How is Expected value of a decision with two possible outcomes calculated?
[Pay-off of A x probability of A] + [Pay-off of B x probability of B]
What is the formula for Net gain?
Expected value - Initial cost of decision
How is Market growth (%) calculated?
Change in the size of the market over a period / Original size of the market x 100
What is the formula for Market share (%)?
Sales of one product OR brand OR business / Total sales in the market x 100
How is Added value calculated?
Sales revenue - costs of bought-in goods and services
What is the formula for Labour productivity?
Output over a time period / Number of employees
What is the formula for Unit costs (average costs)?
Unit costs (average costs) = Total costs / Number of units of output
What is the formula for Capacity utilisation (%)?
Capacity utilisation (%) = (Actual output / Maximum possible output) × 100
What is the formula for Return on investment (%)?
Return on investment (%) = (Profit from the investment (£) / Cost of the investment (£)) × 100
What is the formula for Gross Profit?
Gross Profit = Revenue - Cost of Sales
What does Profit from Operations equal?
Profit from Operations = Operating profit = Gross profit - Operating Expenses
What is the formula for Profit for year?
Profit for year = Operating profit + Profit from other activities - Net finance costs - Tax
What is the formula for Gross profit margin (%)?
Gross profit margin (%) = (Gross profit / Revenue) × 100
What is the formula for Profit from operations margin (Operating profit margin %)?
Profit from operations margin = Operating profit margin (%) = (Operating profit / Revenue) × 100
What is the formula for Profit for year margin (%)?
Profit for year margin (%) = (Profit for year / Revenue) × 100
What is the formula for Variance?
Variance = Budgeted figure - actual figure
What is the formula for Contribution per unit?
Contribution per unit = Selling price - Variable costs per unit
How is Total contribution calculated?
Total contribution = Contribution per unit x Units sold OR Total contribution = Total revenue - Total variable costs
What is the formula for Break-even output?
Break-even output = Fixed costs / Contribution per unit
How is Margin of safety defined?
Margin of safety = Actual level of output - Break-even level of output
What is the formula for Labour turnover (%)?
Labour turnover (%) = (Number of staff leaving / Number of staff employed by the business) x 100
How is Employee retention rate (%) calculated?
Employee retention rate (%) = (Number of employees who remained with the business for the whole period of time / Number of employees at start of the time period) x 100
What is the formula for Employee costs as percentage of turnover?
Employee costs as percentage of turnover = (Employee costs / Turnover) x 100
How is Labour cost per unit calculated?
Labour cost per unit = Labour costs / Units of output
What is the formula for Return on capital employed (ROCE) (%)?
Return on capital employed (ROCE) (%) = (Operating profit / (Total equity + non-current liabilities)) x 100
What does Total equity + non-current liabilities represent?
Total equity + non-current liabilities = capital employed
What is the formula for the current ratio?
Current ratio = Current assets / Current liabilities
The current ratio measures a company’s ability to pay short-term obligations.
How is gearing (%) calculated?
Gearing (%) = (Non-current liabilities / (Total equity + non-current liabilities)) x 100
Gearing indicates the proportion of a company’s capital that comes from debt.
What does total equity + non-current liabilities represent?
Capital employed
This is the total amount of capital used for the acquisition of profits.
What is the formula for payables days?
Payables days = (Payables / Cost of sales) × 365
Payables days measure how long it takes a company to pay its suppliers.
How is receivables days calculated?
Receivables days = (Receivables / Revenue) × 365
This metric indicates how long it takes a company to collect payment from its customers.
What is the formula for inventory turnover?
Inventory turnover = Cost of sales / Average inventories held
This ratio measures how many times a company’s inventory is sold and replaced over a period.
How is the average rate of return (%) determined?
Average rate of return (%) = (Average annual return (£) / Initial cost of project (£)) × 100
This metric evaluates the profitability of an investment relative to its cost.
