ALL EQUATIONS + Financial Ratios Flashcards
Revenue Equation
Price per unit X Quantity sold
Profit Equation
- ) Total revenue - Total costs
2. ) Total contribution - Fixed costs
Market Capitalisation
Number issued shares
X
Current share price
Expected Value of a Decision with 2 Possible Outcomes EQUATION
A&B =
[Pay-off of A x Probability of A]
+
[Pay-off of B x Probability of B]
Net Gain Equation
Expected value - Initial cost of decision
Labour cost per unit Equation
Labour costs / Units of Output
Employee Costs as % of Turnover Equation
Employee costs / Turnover (x100)
Retention Rate Equation
No. employees who remained for whole period
/
No. employee at start of time period
(x100)
Labour Turnover Equation
Number of staff leaving
/
Number of staff employed
(x100)
Margin of safety Equation
Actual level of Output
Breakeven level of Output
//
Forecast Sales
-
Breakeven point
Total Contribution Equation
Contribution per unit
X
Unit Sold
- OR -
Total Revenue - Total Variable Costs
Contribution per unit Equation
Selling price - Variable costs per unit
Break-even Output Equation
Fixed costs
/
Contribution per unit
Variance Equation
Budgeted figure - Actual figure
Profit for year margin Equation
or
Net Profit Margin Equation
Net Profit
/
Sales
(x100)
Operating Profit Margin Equation
Operating Profit
/
Revenue
(x100)
Gross Profit Margin Equation
Gross Profit
/
Revenue
(x100)
Profit for Year Equation
Operating Profit + Profit from others - Net Finance Costs - Tax
Operating Profit Equation
Gross Profit - Operating Expenses
Gross Profit Equation
Revenue - Cost of Sales
Return on Investment Equation
Operating profit
/
Capital Invested
(x100)
Capacity Utilisation Equation
Actual Output
/
Max Possible Output
(x100)
Unit Costs (Average Costs) Equation
Total Costs
/
Number of Units of Output
Labour Productivity Equation
Output Over Time Period
/
Number of Employees
Added Value EQUATION
Sales Revenue
-
Cost of Bought-in goods and service
Market Share Equation
Sales of One product
/
Total Sales in the market
(x100)
Market Growth Equation
Change is size of market (over period)
/
Original size of market
(x100)
Variable Costs Equation
Costs per unit x Total Number of Units
Fixed Costs Equation
Total Cost of Production - (Variable Cost Per Unit x No. Units Produced)
Total Costs Equation
Fixed Costs + Variable Costs
Working Capital Equation
Current Assets - Current Liabilities
Net Assets Equation
Net Current Assets + Non-current Assets - Long-term liabilities
Net Cash Flow Equation
Inflows - Outflows
Secondary profit equation
Margin of safety
X
Contribution per unit
‘Punctuality’ Equation
Deliveries on time
/
Total deliveries
(x100)
Method for working out all profit equations
REVENUE
Minus: Cost of Sales
= Gross Profit
Minus: Expenditure
= Operating profit
Minus: Tax
= Net Profit
Current ratio (working capital ratio) Equation
Current Assets / Current Liabilities
Gearing Equation
Non-current liabilities (loan capital)
/
Total equity + non-current liabilities
(x100)
ROCE (Return on Capital Employed) Equation
Operating profit (or Net Profit)
/
Total equity + Non-current liabilities (both = capital employed)
(x100)
‘Capital employed’ Equation
Total equity + Non-current liabilities
‘Inventory (stock) turnover’ Equation
With ideal number
Cost of goods sold
/
Average inventory held
(NO ideal number - dependent on business)
‘Receivables (debtors) days’ Equation
Receivables (debtors)
/
Revenue
(x365)
‘Payables (creditors) days’ Equation
Payables
/
Cost of sales
(x365)
Price Elasticity Equation
% Change in Quantity Demanded
/
% Change in Price
Income Elasticity Equation
% Change in Quantity Demanded
/
% Change in Income
GDP Equation
Total consumer spending + Business investment + Government spending + Value of exports - Value of imports
Quarterly moving averages equation
(Add latest 4 Quarters)
/
4
Average Rate of Return (Equation)
Average annual profit
/
Cost of investment
(x100)
Average Annual Profit (Equation)
Total profit
/
Number of years
Payables (Equation)
And what is it measured in?
Income required
/
Net cash flow from next year
(x12)
Measured in: years/months
Avg cost per unit (Equation)
Total prod. costs in period (£)
/
Total output in period (Units)
Acid Test Ratio Equation
Current Assets (exc. hardest to turn into cash)
/
Current Liabilities
