Business Calculations Flashcards
How do you calculate fixed costs?
Fixed costs + Variable costs
How do you calculate profit?
Total Revenue - Total Costs
OR
Total contribution - Fixed Cost
How do you calculate market capitalisation?
Number of Shares X Current share volume
How do you calculate sales revenue/turnover?
Selling price X Number of units sold
How do you calculate the expected value of a decision?
- Two possible outcomes - A & B = (Pay-off of A X probability of A) + (Pay-off of B X probability of B)
- N.B. Probability of A + Probability of B = 1.0
How do you calculate net gain within a decision tree?
Expected value - Initial cost of decision
How do you calculate market size volume?
The quantity of goods and services produced in a particular market over a period of time usually one year
How do you calculate market size?
The total sales revenue (from selling all of the goods and services) produced in a particular market over a period of time (usually one year)
How do you calculate sales volume?
The quantity of goods and services produced by a particular business over a period of time (usually one year)
How do you calculate sales value?
The total sales revenue of a particular business over a period of time usually (one year)
How do you calculate market growth (%)?
(Change in size of market between years / Size of the market in year) X 100
How do you calculate sales growth (%)?
(Change in sales of product or business between years / Sales of product or business in year) x 100
How do you calculate market share %?
(Sales of one product OR brand OR business / Total sales in the market) x 100
How do you calculate price elasticity of demand?
(Percentage change in quantity demanded / Percentage change in price) x 100
How do you calculate added value?
Sales revenue - costs of bought-in goods and services
How do you calculate labour productivity?
Output per time period / Number of employees
How do you calculate unit costs?
Total costs of production / Number of units of output produced
How do you calculate capacity utilisation (%)?
Actual output in a given time period / Maximum possible output in a given time period
How do you calculate return on investment (%)?
Return on investment (£) / Cost of the investment (£)
How do you calculate gross profit?
Sales Revenue - Cost of Sales
How do you calculate profit from operations/ operating profit?
Sales Revenue - Cost of Sales - Operating Expenses
How do you calculate profit for the year?
Operating profit + Profit from other activities - Net finance costs - Tax
How do you calculate variance?
The difference between an actual and a budgeted figure.
* Favourable variance results in profits being higher than forecast
* Adverse variance results in profits being lower than forecast
How do you calculate contribution per unit?
Selling price - Variable costs per unit
How do you calculate total contribution?
Contribution per unit × Units produced or sold
OR
Total revenue - Total variable costs
How do you calculate break-even output?
Fixed costs / Contribution per unit
On a break even chart where can you find break- even output?
The level of output at which Total Revenue equals Total Costs
On a break even chart where can you find the level of profit at a given level of output?
The vertical distance between the Total Revenue line and the Total Cost line
How do you calculate margin of safety?
Actual level of output - Breakeven level of output
How do you calculate gross profit margin (%)?
(Gross profit / Sales revenue) x 100
How do you calculate profit from operations margin/ operating profit margin (%)?
(Operating profit / Sales revenue) x 100
How do you calculate profit from the year margin?
(Profit for year / Sales revenue) x 100
How do you calculate labour turnover (%)?
(Number of staff leaving during the year / Average number of staff employed by the business during the year) x 100
How do you calculate 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
How do you calculate employee costs as percentage of turnover?
(Employee costs / Sales turnover) x 100
How do you calculate labour costs per unit?
Labour costs / Units of output
How do you calculate the capital employed?
Total equity + non-current liabilities
How do you calculate return on capital employed (ROCE) (%)?
(Operating profit / Total equity + non-current liabilities) x 100
How do you calculate current ratio?
Current assets / Current liabilities
How do you calculate gearing %?
(Non-current liabilities / Total equity + non-current liabilities) x 100
How do you calculate payable days?
(Payables / Cost of sales) x 365
How do you calculate receivable days?
(Receivables / Sales revenue) x 365
How do you calculate inventory turnover?
Cost of goods sold / Average inventories held
How do you calculate the average rate of return %?
(Net return from the project (£) or number of years / Initial cost of the project (£)) x 100
