ALL NEED TO KNOW EQUATIONS Flashcards
GROSS PROFIT
Sales Revenue - Cost of Goods
SALES REVENUE
Quantity Sold X Selling Price
NET PROFIT
Gross Profit - Other Expenses
RETAINED PROFITS
Sales Revenue - Total Costs
NET CURRENT ASSETS
Current Assets - Current Liabilities
TOTAL COSTS
Fixed Costs + Variable Costs
TOTAL REVENUE
Quantity Sold X Selling Price
SALES IN VALUE
Quantity Sold X Selling price per unit
BREAK-EVEN POINT
Fixed Costs / Contribution per unit
CONTRIBUTION PER UNIT
Selling Price - Variable Costs per unit
TOTAL CONTRIBUTION
Sales Revenue - Total Variable Costs
TOTAL VARIABLE COST
Variable Costs per unit X Quantity
OR
Contribution per unit X Number of Units Sold
COST OF GOODS SOLD
Opening Inventories + Purchases - Closing Inventories
PROFIT OR LOSS FOR THE YEAR
Gross Profit - Expenses + Other Income
DEPRECIATION
(Historic Value - Residual Value) / Expected Life
CAPITAL EMPLOYED
Owner’s or Shareholder’s Capital + Retained Profit - Drawings
GROSS PROFIT MARGIN
(Gross Profit / Revenue) X 100
MARK-UP
(Gross Profit / Cost of Goods Sold) X 100
NET PROFIT MARGIN
(Net Profit / Revenue) X 100
RETURN ON CAPITAL EMPLOYED
(Net Profit before interest & tax / Capital Employed) X 100
CURRENT RATIO
Current Assets / Current Liabilities
LIQUID CAPITAL RATIO
(Current Assets - Inventory) / Current Liabilities
TRADE RECEIVABLE DAYS
(Trade Receivables / Credit Sales) X 365
AVERAGE INVENTORY
(Opening Inventory + Closing Inventory) / 2
INVENTORY TURNOVER
(Average Inventory / Cost of Sales) X 365
