AQA A-level Business Formulas Flashcards
total costs =
fixed costs + variable costs
profit =
total revenue - total costs OR total contribution - fixed costs
variable costs =
variable cost per unit x number of units sold
total revenue (sales revenue / turnover) =
selling price per unit x number of units sold
Market capitalisation of a business =
Number of issued shares x current share price
Expected value of a decision with two possible outcomes - A&B =
(Pay-off of A x probability of A) + (pay-off of B x probability of B)
In a decision tree net gain =
Expected value - initial cost of decision
Market size (volume) =
Is the quantity of goods and services produced in a particular market over a period of time (usually one year)
Market size (value) =
Is the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time (usually one year)
Sales volume =
Is the quantity of goods and services produced by a particular business over a period of time (usually one year)
Sales value =
Is the total sales revenue of a particular business over a period of time usually 1 year
Market growth (%) in year ‘X’ =
(Change in size of the market between year (X-1) and year X / size of the market in year (X-1)) x 100
Sales growth (%) in year ‘X’ =
(Change in sales of product or business between year (X-1) and year X / sales of product or business in year (X-1)) x 100
Market share % =
(Sales of one product or brand or business / total sales in the market) x 100
Price elasticity of demand =
(Percentage change in quality demanded / percentage change in price) x 100
Income elasticity of demand =
(Percentage change in quality demanded / percentage change in income) x 100
Added value (value added) =
Sales revenue - cost of bought in goods and services
Labour productivity =
Output per time period / number of employees
Unit costs (average costs) =
Total costs of production / number of units of output produced
Capacity utilisation (%) =
(Actual output in a given time period / maximum possible output in a given time period) x 100
Return on investment (%) =
((Final value of investment -initial value of investment (£)) / cost of the investment (£) ) x 100
Gross profit =
Sales revenue - cost of sales
Operating profit =
Sales revenue - cost of sales - operating expenses
Profit for year =
Operating profit + profit from other activities - net finance costs - tax
Variance =
The difference between an actual and a budgeted figure
Contribution per unit =
Selling price - variable cost per unit
Total contribution (1) =
Contribution per unit x units produced or sold
Total contribution (2) =
Total revenue - total variable costs
Break even output =
Fixed costs / contribution per unit
Margin of safety =
Actual level of output - break even level of output
Gross profit margin (%) =
(Gross profit / sales revenue) x 100
Operating profit margin (%) =
(Operating profit / sales revenue) x 100
Profit for the year margin (%) =
(Profit for the year / sales revenue) x 100
Labour turnover (%) =
(Number of staff leaving during the year / average number of staff employed by the business during the year) x 100
Employee retention rate (%) for a particular time period =
(Number of staff leaving during the year / average number of staff employed by the business during the year) x 100
Employee costs as a percentage of turnover =
(Employee costs / sales turnover) x 100
Labour cost per unit =
Labour costs / units of output
Return on capital employed (ROCE) (%) =
(Operating profit / total equity + non current liabilities) x 100
Capital employed =
Total equity + non current liabilities
Current ratio =
Current asserts / current liabilities
Gearing (%) =
(Non current liabilities / total equity + non current liabilities) x 100
Payables days (creditors) =
(Payables / cost of sales) x 365
Receivables days (debtors) =
(Receivables / sales revenue) x 365
Inventory turnover =
Cost of goods sold / average inventories held
Average rate of return (%) =
(Net return from project (£) or number of years / initial cost of project (£)) x 100
