Business equations

Question 1

Revenue/ sales/ turnover

Answer 1

Selling p/unit X Number of units sold

Question 2

Variable costs

Answer 2

Variable Cost p/unit X Number of units sold

Question 3

Total costs

Answer 3

Fixed costs + Variable costs

Question 4

Profit (2)

Answer 4

Total rev - Total costs

Total - Fixed costs

Question 5

Market capitalisation

Answer 5

Number of issued shares X current share price

Question 6

Net gain

Answer 6

Expected value - initial cost of decision

Question 7

Market growth (%)

Answer 7

Change in size of the market over a period / Original size of the market X 100

Question 8

Market Share (%)

Answer 8

Sales of product/brand/business / Total sales in the market X 100

Question 9

Added value

Answer 9

Sales rev - Cost of bought in goods and services

Question 10

Labour productivity

Answer 10

output over a time period /Number of employees

Question 11

Unit costs (av)

Answer 11

Total costs / Number of units of output

Question 12

Capacity utilisation (%)

Answer 12

Actual output / maximum possible output X 100

Question 13

Return on investment (%)

Answer 13

Profit from the investment / Cost of the investment X 100

Question 14

Gross profit

Answer 14

Revenue - Cost of sales

Question 15

Profit from operations

Answer 15

Gross profit - operating expenses

Question 16

Profit for the year

Answer 16

Operating profit + Profit from other activities - Net finances costs - Tax

Question 17

Gross profit margin (%)

Answer 17

Gross profit / revenue X 100

Question 18

Profit from operations margin (%)

Answer 18

Operation profit / revenue X 100

Question 19

Profit for year margin (%)

Answer 19

profit for year / revenue X 100

Question 20

Variance

Answer 20

Budgeted figure - actual figure

Question 21

Contribution per unit

Answer 21

Selling price - Variable costs per unit

Question 22

Total contribution

Answer 22

Contribution per unit X units sold

Total rev - total variable costs

Question 23

Break even output

Answer 23

Fixed costs / contribution p/unit

Question 24

Margin of safety

Answer 24

actual level of output - break even level of output

Question 25

Labour turnover

Answer 25

Number of staff leaving / Number of staff employed by the business X 100

Question 26

Employee retention rate % for a particular time period

Answer 26

No’ of employees who remained at business for a whole period of time / no’ of employees at the start of time period X 100

Question 27

Employee costs as percentage of turnover

Answer 27

employee costs / turnover X 100

Question 28

Labour costs per unit

Answer 28

Labour costs / units of output

Question 29

ROCE

total equity + non current liabilities = capital employed

Answer 29

operating profit / total equity + non - current liabilities X 100

Question 30

current ratio

Answer 30

current assets / current liabilities

Question 31

Gearing (%)

total equity + non - current liabilities = capital employed

Answer 31

non current liabilities / Total equity + non - current liabilities X 100

Question 32

Payables days

Answer 32

receivables / revenue X 365

Question 33

Inventory turnover

Answer 33

Cost of sales / Average inventories held

Question 34

Average rate of return (%)

Answer 34

Average annual return / Initial cost of project X 100