Business Formula

Question 1

Total Cost

Answer 1

Total cost = Total Fixed Costs + Total Vriable costs

TC = TFC + TVC

Question 2

Revenue

Answer 2

Revenue = Price x quantity

Question 3

Break Even

Answer 3

Break even point (units) = Fixed cost / (sales price - varaible cost)

Break even point (in costs/revenue) = break even point (units) x sales price

Question 4

Margin of safety

Answer 4

Margin of Safety = actual or budgeted sales - break even sales

Question 5

Interest (on loans)

Answer 5

Interest (%) = ((total repayment - borrowed amount) / borrowed amount) x100

Question 6

Net cash flow

Answer 6

Net Cash flow = cash inflows - cash outflows in a given period

Question 7

Opening balance

Answer 7

Opening balance = closing balance of the previous period

Question 8

Closing balance

Answer 8

Opening balance + net cash flow

Question 9

Gross Profit

Answer 9

Gross Profit = sales revenue - cost of sales

Question 10

Gross profit margin

Answer 10

Gross profit margin (%) = (gross profit / sales revenue) x 100

Question 11

Net profit

Answer 11

Net profit = gross profit - other operating expenses and interest

Question 12

Net profit margin

Answer 12

Net profit margin (%) = (net profit/sales revenue) x 100

Question 13

Average rate of return

Answer 13

ARR (%) = (average annual profit (total profit/n.o of yrs) / cost of investment) x 100