Business equations

Question 1

how do you work out revenue?

Answer 1

selling price per unit x number of units sold

Question 2

how do you work out variable costs?

Answer 2

Variable cost per unit x number of units sold

Question 3

how do you work out total costs?

Answer 3

fixed costs + variable costs

Question 4

how do you work out market capitalisation of a business?

Answer 4

number of issued shared x current share price

Question 5

how do you work out net gain?

Answer 5

expected value -initial cost of decision

Question 6

how do you work out market growth?

Answer 6

change in size of market over a period divide by original size of market X 100

Question 7

how do you work out market share?

Answer 7

sales of one product of brand or business divided by total sales in market X 100

Question 8

how do you work out added value?

Answer 8

sales revenue - cost of bought in goods

Question 9

how do you work out labour productivity?

Answer 9

output over a time period divided by number of employees

Question 10

how do you work out unit costs?

Answer 10

total costs divided by number of units of output

Question 11

how do you work out capacity utilisation?

Answer 11

actual output divided by maximum possible output X 100

Question 12

how do you work out return on investment?

Answer 12

profit from investment divided by cost of the investment X 100

Question 13

how do you work out gross profit?

Answer 13

revenue - cost of sales

Question 14

how do you work out operating profit?

Answer 14

gross profit - operating expenses

Question 15

how do you work out profit for the year?

Answer 15

operating profit + profit from other activities - net finance costs - tax

Question 16

how do you work out gross profit margin?

Answer 16

gross profit divided by revenue X 100

Question 17

how do you work out profit from operations margin?

Answer 17

operating profit divided by revenue X 100

Question 18

how do you work out profit for year margin

Answer 18

profit for year divided by revenue X 100

Question 19

how do you work out variance?

Answer 19

budgeted figure - actual figure

Question 20

how do you work out contribution per unit?

Answer 20

selling price per unit - variable cost per unit

Question 21

how do you work out total contribution

Answer 21

contribution per unit X unit sold OR total revenue- total variable costs

Question 22

how do you work out break-even output?

Answer 22

Fixed costs divided by contribution per unit

Question 23

how do you work out margin of safety?

Answer 23

actual level of output - break-even level

Question 24

how do you work out labour turnover %?

Answer 24

number of staff leaving divided by number of staff employed by the business X 100

Question 25

how do you work out employee costs as % of turnover?

Answer 25

employee costs divided by turnover X 100

Question 26

how do you work out labour costs per unit?

Answer 26

labour costs divided by units of output

Question 27

how do you work out return on capital employed?

Answer 27

operating profit divided by total equity + non-current liabilities X 100

Question 28

how do you work out current ratio?

Answer 28

current assets divided by current liabilities

Question 29

how do you work out gearing %?

Answer 29

non-current liabilities divided by total equity +non-current liabilities X 100

Question 30

how do you work out payable days?

Answer 30

payables divided by cost of sales X 365

Question 31

how do you work out receivable days?

Answer 31

receivables divided by revenues X100

Question 32

how do you work out inventory turnover?

Answer 32

cost of sales divided by average inventories held

Question 33

how do you work out average rate of return

Answer 33

average annual return divided by initial cost of project X100