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Business A level > ALL EQUATIONS + Financial Ratios > Flashcards

ALL EQUATIONS + Financial Ratios Flashcards

1
Q

Revenue Equation

A

Price per unit X Quantity sold

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2
Q

Profit Equation

A
  1. ) Total revenue - Total costs

2. ) Total contribution - Fixed costs

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3
Q

Market Capitalisation

A

Number issued shares

X

Current share price

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4
Q

Expected Value of a Decision with 2 Possible Outcomes EQUATION

A

A&B =

[Pay-off of A x Probability of A]

+

[Pay-off of B x Probability of B]

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5
Q

Net Gain Equation

A

Expected value - Initial cost of decision

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6
Q

Labour cost per unit Equation

A

Labour costs / Units of Output

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7
Q

Employee Costs as % of Turnover Equation

A

Employee costs / Turnover (x100)

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8
Q

Retention Rate Equation

A

No. employees who remained for whole period

/

No. employee at start of time period

(x100)

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9
Q

Labour Turnover Equation

A

Number of staff leaving

/

Number of staff employed

(x100)

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10
Q

Margin of safety Equation

A

Actual level of Output

Breakeven level of Output

//

Forecast Sales

-

Breakeven point

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11
Q

Total Contribution Equation

A

Contribution per unit

X

Unit Sold

  • OR -

Total Revenue - Total Variable Costs

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12
Q

Contribution per unit Equation

A

Selling price - Variable costs per unit

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13
Q

Break-even Output Equation

A

Fixed costs

/

Contribution per unit

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14
Q

Variance Equation

A

Budgeted figure - Actual figure

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15
Q

Profit for year margin Equation

or

Net Profit Margin Equation

A

Net Profit
/

Sales

(x100)

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16
Q

Operating Profit Margin Equation

A

Operating Profit

/

Revenue

(x100)

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17
Q

Gross Profit Margin Equation

A

Gross Profit

/

Revenue

(x100)

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18
Q

Profit for Year Equation

A

Operating Profit + Profit from others - Net Finance Costs - Tax

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19
Q

Operating Profit Equation

A

Gross Profit - Operating Expenses

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20
Q

Gross Profit Equation

A

Revenue - Cost of Sales

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21
Q

Return on Investment Equation

A

Operating profit

/

Capital Invested

(x100)

22
Q

Capacity Utilisation Equation

A

Actual Output

/

Max Possible Output

(x100)

23
Q

Unit Costs (Average Costs) Equation

A

Total Costs

/

Number of Units of Output

24
Q

Labour Productivity Equation

A

Output Over Time Period

/

Number of Employees

25
Q

Added Value EQUATION

A

Sales Revenue

-

Cost of Bought-in goods and service

26
Q

Market Share Equation

A

Sales of One product

/

Total Sales in the market

(x100)

27
Q

Market Growth Equation

A

Change is size of market (over period)

/

Original size of market

(x100)

28
Q

Variable Costs Equation

A

Costs per unit x Total Number of Units

29
Q

Fixed Costs Equation

A

Total Cost of Production - (Variable Cost Per Unit x No. Units Produced)

30
Q

Total Costs Equation

A

Fixed Costs + Variable Costs

31
Q

Working Capital Equation

A

Current Assets - Current Liabilities

32
Q

Net Assets Equation

A

Net Current Assets + Non-current Assets - Long-term liabilities

33
Q

Net Cash Flow Equation

A

Inflows - Outflows

34
Q

Secondary profit equation

A

Margin of safety

X

Contribution per unit

35
Q

‘Punctuality’ Equation

A

Deliveries on time

/

Total deliveries

(x100)

36
Q

Method for working out all profit equations

A

REVENUE

Minus: Cost of Sales

= Gross Profit

Minus: Expenditure

= Operating profit

Minus: Tax

= Net Profit

37
Q

Current ratio (working capital ratio) Equation

A

Current Assets / Current Liabilities

38
Q

Gearing Equation

A

Non-current liabilities (loan capital)

/

Total equity + non-current liabilities

(x100)

39
Q

ROCE (Return on Capital Employed) Equation

A

Operating profit (or Net Profit)

/

Total equity + Non-current liabilities (both = capital employed)

(x100)

40
Q

‘Capital employed’ Equation

A

Total equity + Non-current liabilities

41
Q

‘Inventory (stock) turnover’ Equation

With ideal number

A

Cost of goods sold

/

Average inventory held

(NO ideal number - dependent on business)

42
Q

‘Receivables (debtors) days’ Equation

A

Receivables (debtors)

/

Revenue

(x365)

43
Q

‘Payables (creditors) days’ Equation

A

Payables

/

Cost of sales

(x365)

44
Q

Price Elasticity Equation

A

% Change in Quantity Demanded
/
% Change in Price

45
Q

Income Elasticity Equation

A

% Change in Quantity Demanded
/
% Change in Income

46
Q

GDP Equation

A

Total consumer spending + Business investment + Government spending + Value of exports - Value of imports

47
Q

Quarterly moving averages equation

A

(Add latest 4 Quarters)

/

4

48
Q

Average Annual Profit (Equation)

A

Total profit
/
Number of years

49
Q

Payables (Equation)

And what is it measured in?

A

Income required
/
Net cash flow from next year
(x12)

Measured in: years/months

50
Q

Avg cost per unit (Equation)

A

Total prod. costs in period (£)

/

Total output in period (Units)

51
Q

Acid Test Ratio Equation

A

Current Assets (exc. hardest to turn into cash)
/
Current Liabilities

52
Q

Average Rate of Return (Equation)

A

Average annual profit
/
Cost of investment
(x100)

Business A level (13 decks)

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