Business Equations Flashcards

1
Q

Profit

A

Profit = revenue - costs

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2
Q

Total costs

A

Total costs = total fixed costs + total variable costs

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3
Q

Revenue

A

Revenue = price x quantity sold

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4
Q

Break even points in units

A

Fixed cost / (sales price - variable cost)

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5
Q

Break even point in revenue

A

break-even point in units x sales price

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6
Q

Margin of safety

A

Margin of safety = actual output - break even output

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7
Q

Net cash flow

A

Net cash flow = cash inflows - cash outflows

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8
Q

Gross profit

A

Gross profit = sales revenue - cost of sales

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9
Q

Gross profit margin (%)

A

Gross profit margin (%) = gross profit / sales revenue (x100)

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10
Q

Net profit

A

Net profit = gross profit - expenses

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11
Q

Net profit margin (%)

A

Net profit margin (%) = net profit / sales revenue (x100)

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12
Q

Current ratio

A

Current ratio = current assets / current liabilities

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13
Q

Working capital

A

Working capital = current assets - current liabilities

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14
Q

Acid test ratio

A

Acid test ratio = (current assets - inventory) / current liabilities

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15
Q

Average cost per unit

A

Average cost per unit = total costs / total output

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16
Q

Capacity utilisation

A

Capacity utilisation = current output / maximum possible output (x100)

17
Q

Percentage change

A

(Final value - original value) / original value x100

(F - O / O) x100

18
Q

PED
(price elasticity demand)

A

PED = % change in quantity demanded / % change in price

19
Q

IED

A

IED = % change in quantity demanded / % change in income

20
Q

Contribution

A

Revenue - variable cost

21
Q

Sales volume

A

Sales revenue / selling price

22
Q

Good current ratio

23
Q

Good acid test

24
Q

Total variance

A

Actual profit - budgeted profit

25
Q

Spare capacity

A

Max - capacity utilisation %

26
Q

ROCE (return of capital employed)

A

(Operating profit / capital employed) x100

27
Q

Market share

A

(business sales / market sales) x100

28
Q

ARR (average rate of return)

A
  1. Add the net cash flows together
  2. Subtract the cost
  3. Divide that number by the number of years
  4. Divide that number by cost and times by 100
  5. Answer should be a %
29
Q

Labour productivity

A

Output / Number of employees

30
Q

Labour turnover

A

(No. employees who left / Avg no. employees) x 100

Average no. employees = (No. employees at the start + No. employees at the end) ÷ 2.