Business equations Flashcards
total contribution
contribution per unit X units sold OR total revenue - total variable costs
profit for year margin (%)
profit for year/ revenue X 100
contribution per unit
selling price - variable costs per unit
variance
budgeted figure- actual figure
profit from operations margin
operating profit margin (%) = operating profit/ revenue X 100
gross profit margin (%)
gross profit/ revenue X 100
profit for year
operating profit + profit from other activities- net finance costs - tax
profit from operations
operating profits= gross profit- operating expenses
gross profit
revenue - cost of sales
return on investment (%)
profit from the investment (£)/ cost of the investment (£) X 100
capacity utilisation (%)
actual output/ maximum possible output X 100
unit costs (average costs)
total costs/ number of units of output
labour productivity
output over a time period/ number of employees
added value
sales revenue- costs of bought-in goods and services
market share (%)
sales of one product OR brand OR business/ total sales in the market X 100
net gain
expected value - initial cost of decision
total costs
fixed costs + variable costs
expected value of a decision with two possible outcomes
[pay-off of A X probability of A] +[pay-off of B x probability of B]
market growth (%)
change in the size of the market over a period/ original size of the market X 100
market capitalisation of a business
number of issued shares X current share price
profit
total revenue - total costs
variable costs (total variable costs)
variable cost per unit X number of units sold
Revenue (sales or turnover)
selling price per unit X number of units sold
return on capital (ROCE) (%)
operating profit/ total equity + non-current liabilities X 100
where total equity + non-current liabilities = capital employed
current ratio
current assets/ current liabilities
labour cost per unit
labour costs/ units of output
employee costs as percentage of turnover
employee costs/ turnover X 100
margin of safety
actual level of output - break-even level of output
labour turnover (%)
number of staff leaving/ number of staff employed by the business X 100
break-even output
fixed costs / contribution per unit
receivables days
receivables / revenue X 365
gearing (%)
non-current liabilities/ total equity + non-current liabilities X 100
Where total equity + non- current liabilities = capital
payables days
payables/ cost of sales X 365
inventory turnover
cost of sales / average indentures held
