A-Level Business Formulas

Question 1

Absenteeism

Answer 1

(Number of days of absence/Total number of workdays ) ×100

Question 2

Accounting rate of returns (ARR)

Answer 2

(Average annual profits/average investment) ×100

Question 3

Acid Test Ratio

Answer 3

Liquid assests/Current liabilities

Question 4

Annual depreciation

Answer 4

(Original cost of assests-Expected residual value)/Expected useful life of assets in years

Question 5

Average inventory

Answer 5

(Inventory at the start of the year + inventory at the end of the year)/2

Question 6

Average investment

Answer 6

(Initial capital cost + Residual capital value)/2

Question 7

Capital employed

Answer 7

Non-current liabilities + issued shares + reserve (or Shareholde’ equity)

Question 8

Costs of sales

Answer 8

(Opening inventory + Purchase) - Closing inventories

Question 9

Current Ratio

Answer 9

Current assets/ Current liabilities

Question 10

Dividend cover ratio

Answer 10

Annual Profits/Annul Dividends

Question 11

Dividend per Share

Answer 11

Total annual dividends / Total number of issued shares

Question 12

Dividend Yield Ratio

Answer 12

(Dovidend per share/ Market share price) ×100

Question 13

Earnings per share

Answer 13

Annual profit/ Number of shares issued

Question 14

Free Float

Answer 14

EST (next activity) -Duration - EST (this activity)

Question 15

Gearing Ratio

Answer 15

(Non-current liabilities/Capital employed) × 100

Question 16

Gross profit

Answer 16

Revenue - Cost of sales

Question 17

Gross Profit Margin Ratio

Answer 17

(Gross profits/Revenue) ×100

Question 18

Income elasticity of demand

Answer 18

%change in demand /%change in consumer income

Question 19

Liquid Assets

Answer 19

Current assets - Inventories

Question 20

Market Shares

Answer 20

(Sales of the business in a time period/ total market sales in the time period) × 100

Question 21

Net book value

Answer 21

The current statement of financial position value of a non-current asset =Original cost less accumulated depreciation

Question 22

Net realizable value

Answer 22

Value of existing inventory -cost of selling inventory

Question 23

Operating profits margin ratio

Answer 23

(Operating profit/revenue) × 100

Question 24

Additional months to payback

Answer 24

(Additional net cashflow needed/annuel cashflow of that year) ×12 months

Question 25

Prices /Earning Ratio

Answer 25

Market Share Price /Earning per Share

Question 26

Price Elasticity of Demand

Answer 26

Percentage change in quantity demanded/ Percentage change in price

Question 27

Promotional Elasticity of Demand

Answer 27

%Change in Demand for the product /%Change in Promotional Spending

Question 28

Rate of inventory turnover

Answer 28

Cost of sale/ Average inventory

Question 29

Reserves

Answer 29

Shareholders’ Equity - Share capital

Question 30

Return to capital employed ratio

Answer 30

(Operating profit/ capital employed) ×100

Question 31

Total Float

Answer 31

LFT -duration -EST

Question 32

Total revenue

Answer 32

Selling Price × Quantity sold

Question 33

Trade payables turnover

Answer 33

(Trade payables/Credit purchases) x365

Question 34

Trade receivables

Answer 34

(Trade receivables /Credit sales) x365

Question 35

Working capital or Net current assests

Answer 35

Current Assests - Current liabilities

Question 36

% change

Answer 36

[(Old value - new value)/old value] ×100

Question 37

Labour turnover

Answer 37

(Number of departures/average number of employees) × 100

Question 38

Labour productivity

Answer 38

Total output in a given time/ Total workers employed