ALL BUSINESS EQUATIONS Flashcards
Revenue =
Selling price per unit x number of units sold
Variable costs =
Variable cost per unit x number of units sold
Total costs =
fixed costs + variable costs
Profit =
total revenue - total cost
Market Capitalisation =
Number of issued shares x current share price
Net gain =
Expected value - initial cost of decision
Market growth (%) =
Change in the size of the market over a period / original size of the market x 100
Market share (%) =
Sales of one product OR brand OR business / Total sales in the market x 100
Added value =
Sales revenue - costs of bought in goods and services
Labour productivity =
Output per time period / number of employees
Capacity utilisation (%) =
(actual output/maximum possible output) x100
Unit costs =
total cost / units of output
Return on investment (%) =
Profit from the investment (£) / Cost of the investment (£) × 100
Gross profit margin (%) =
Gross profit/sales revenue x 100
Gross profit =
revenue - cost of goods sold
Operating profit =
gross profit - operating expenses
Net profit =
operating profit + gross profit - net finance costs + tax
Profit for year margin =
Profit for the year / sales revenue x 100
Operating profit margin =
Operating profit / sales revenue x 100
Variance =
budgeted figure - actual figure
Contribution per unit =
Selling price - variable costs per unit
Break-even output =
Fixed costs / contribution per unit
Margin of safety =
Actual output - break even output
Labour turnover (%) =
(Number of staff leaving / number of staff employed) x 100
Employee retention rate (%) =
No. of employees at end of period - number of leavers / No. of employees at end of period x 100
Employee costs as percentage of turnover =
Employee costs / sales turnover x 100
Labour costs per unit =
Labour costs / units of output
Return on capital employed (%) =
operating profit / total equity + non current liabilities x 100
Current ratio =
current assets / current liabilities
Gearing (%) =
Non current liabilities / (total equity + non current liabilities) x100
Payables days =
(Payables / cost of sales) x 365
Receivables days =
Receivables / revenue x 365
Inventory turnover =
cost of sales / average inventories held
Average rate of return (%) =
Average annual return (£) / Initial cost of project (£) × 100
