Business Calculations

Question 1

Percentage Change

Answer 1

new-old/old x 100

Question 2

Market Share

Answer 2

Firms sales/total industry sales x 100

Question 3

Price elasticity of demand (PED)

Answer 3

% change in quantity demanded/ % change in price

Question 4

Income Elasticity of Demand (YED)

Answer 4

% change in quantity demanded/ % change in income

Question 5

Total Revenue

Answer 5

sales price per unit x quantity

Question 6

Total Variable Costs

Answer 6

Variable Cost Per Unit x quantity

Question 7

Total Costs

Answer 7

Total Variable Costs + Total Fixed Costs

Question 8

Net Cash Flow

Answer 8

Inflows - Outflows

Question 9

Opening Balance

Answer 9

Closing balance from the previous month

Question 10

Closing Balance

Answer 10

Opening balance that month + net cash flow

Question 11

Contribution Per Unit

Answer 11

Sales price per unit - Variable cost per unit

Question 12

Break even output

Answer 12

Total Fixed Costs/ Contribution per Unit

Question 13

Total Contribution

Answer 13

Contribution per unit x Quantity

Question 14

Margin of Safety

Answer 14

Actual/forecast output - Breakeven output

Question 15

Profit

Answer 15

• Total Revenue - Total Costs

Question 16

Variance

Answer 16

Actual figures - budgeted figures

Question 17

Profit Margin

Answer 17

Profit / Revenue x 100 = Profit Margin %

-use gross profit for gross profit margin, operating profit for operating profit margin, net profit/ profit for the year for net profit margin

Question 18

Gross profit

Answer 18

Revenue - Cost of Sales

Question 19

Operating Profit

Answer 19

Revenue - Cost of sales and Operating expenses

Question 20

Net Profit / Profit for the Year

Answer 20

Revenue - Cost of Sales, and Operating Expenses and Net Interest

Question 21

Current Ratio

Answer 21

Current Assets / Current Liabilities :1

Rule of thumb 1.5 is good

Less than 1 means not enough current assets to meet current liabilities

Question 22

Acid Test Ratio

Answer 22

Current Assets - inventory / current liabilities :1

Rule of thumb 1 is good

Question 23

Productivity

Answer 23

Total Output in time period / number of inputs

input can be employees or machines

Question 24

Capacity Utilisation

Answer 24

Actual output / maximum possible output x 100

85-90% is ideal

Depends on context, concerts will want close to or 100%

Question 25

Gearing

Answer 25

Non-Current Liabilities / capital employed x 100

Capital employed is the sum of non current liabilities and total equity. Total equity is retained earnings / reserves and share capital

-above 50% is highly geared
-Below 50% is low gearing

Question 26

Return On Capital Employed (ROCE)

Answer 26

Operating Profit / Capital Employed x 100

Capital Employed = total equity + non current liabilities

Question 27

Average Rate of Return (ARR)

Answer 27

1.Total net cash flow - investment = project lifetime profit
2.Profit / number of years = average annual rate of return
3. Average annual return / initial investment x 100

Question 28

Critical Path Analysis Float

Answer 28

LFT - duration - EST

Question 29

Labour turnover

Answer 29

Number of employees who leave in a time period / total number of employees in the business x 100

Question 30

Absenteeism Rate

Answer 30

Number of workers or worker days or hours lost to absence / Total number of workers or worker days or hours that could have been achieved x 100

Question 31

Cost Per Unit (CPU)

Answer 31

Total Costs / quantity produced

Question 32

Labour Cost Per Unit

Answer 32

Total Labour Costs / quantity produced