AQA business AL - formulas Flashcards
profit
profit = Total revenue - Total costs
revenue / turnover
revenue = selling price x number of units sold
gross profit
sales rev - cost of sales (direct costs)
operating profit
gross profit - operating costs (indirect costs)
gross profit margin & operating profit margin
- literal definitions
gross profit/ sales rev x 100 ,, operating profit/ sales rev x 100
- for every £1 in sales the business makes x amount of gross/ operating profit
profit for the year / net profit
operating profit +/ - interest and minus debts e.g. tax
break even point
total fixed costs/ contribution per unit
contribution per unit
selling price - variable cost per unit
labour productivity
output over a specific period / number of employees
income elasticity
% change in quantity demanded / % of change in income
price elasticity
% change in quantity demanded / % change in price
output
average productivity per employee x number of employees
market capitalisation
number of shares owned by shareholders x share price
- measures total market value of issued share capital of the company
market share
sales rev of a company / sales rev of entire market x 100
labour turnover
number of staff leaving per year / average number of staff x 100
labour retention
number of staff staying per year / average number of staff x 100
capacity utilisation
current output/ max output x 100
return on investment
investment return / original investment
added value or profit per unit
selling price of product - total cost to create product
cost per unit
total cost / number of units produced
capital employed
total equity + NCL
gearing ratio
Ncl/ capital employed x 100
above 50% highly geared,, below 25% lowly geared
current ratio
CA/ CL
= x:1
- preferred ratio is between 1.5:1 to 2:1
working capital
CA - CL
inventory (stock) turnover
cost of goods sold (over a year)/ average inventory held
- the higher the better
- the number of times a year you sell of all your stock
receivables days
receivables/ revenue x 365
- the lower the better (preferably lower than payables days)
- how long it takes to receive money from customers
payables days
payables/ cost of sales x 365
- higher the better
- how long until business has to pay back suppliers
ROCE - return on capital employed
operating profit/ capital employed x 100
