Business Formulae

Question 1

TC

Answer 1

TC = TFC + TVC

Question 2

Sales Revenue

Answer 2

Sales revenue = Price x Quantity Sold

Question 3

Gross Profit

Answer 3

Gross profit = Sales Revenue - Cost of goods sold

Question 4

COGS

Answer 4

COGS = Opening Stock + Purchases - Closing Stock

Question 5

Net Profit

Answer 5

Net Profit = Gross Profit - Expenses (Indirect or Fixed costs)

Question 6

Equity

Answer 6

Equity = Share Capital + Retained Earnings (should equal net assets)

Question 6

Net Assets

Answer 6

Net Assets = (Noncurrent Assets + Current Assets) - (Noncurrent Liabilities + Current Liabilities)

Question 7

Annual Depreciation

Answer 7

Annual depreciation = (Purchase cost - Scrap value) / Lifespan

Question 8

Depreciation per unit

Answer 8

Depreciation per unit = (Purchase Cost - Scrap Value) / Expected Number of units over lifetime

Question 9

Depreciation expense

Answer 9

Depreciation expense = Depreciation per unit * Number of units produced (so far)

Question 10

GPM

Answer 10

GPM = Gross Profit / Sales Revenue * 100

Question 11

Net Profit Margin

Answer 11

Net Profit Margin = Profit before interest and tax / Sales Revenue * 100

Question 12

ROCE

Answer 12

ROCE = Profit before Interest and Tax / Capital Employed * 100

Question 13

Capital Employed

Answer 13

Capital Employed = Noncurrent Liabilities + Equity = Total Assets - Current Liabilities

Question 14

Current Ratio

Answer 14

Current Ratio = Current Assets / Current Liabilities

Question 15

Stock turnover ratio

Answer 15

Stock Turnover (times) = Cost of Goods Sold / Average Stock

Question 15

Acid (Quick) Ratio

Answer 15

Quick Ratio = (Current Assets - Stock) / Current Liabilities

Question 16

Gearing Ratio

Answer 16

Gearing Ratio = Noncurrent Liabilities / Capital Employed * 100

Question 17

Stock turnover (days)

Answer 17

Stock Turnover (days) = Average Stock / Cost of Goods Sold * 365

Question 18

Debtor days

Answer 18

Debtor Days = Debtors / Total Sales Revenue * 365

Question 18

Net cash flow

Answer 18

Net Cash Flow = Inflows of Cash - Outflows of Cash

Question 18

Average stock

Answer 18

Average Stock = (Opening Stock + Closing Stock) / 2

Question 19

Creditor days

Answer 19

Creditor Days = Creditors / Cost of Goods Sold * 365

Question 20

Working captial

Answer 20

Working Capital = Current Assets - Current Liabilities

Question 21

payback period

Answer 21

Payback Period = Initial Investment / Contribution per month (time period)

Question 22

Average Rate of return

Answer 22

Average Rate of Return = (Profit per year) / Initial Amount * 100

Question 22

Profit per year

Answer 22

Profit per year = Total Profit / Number of Profitable Years

Question 23

Condition for attraction

Answer 23

Condition for attraction ARR > Interest Rates AND Payback Period < Profitable Lifetime

Question 24

Discount factor

Answer 24

Discount factor = 1 / (Rate of Interest)^Time Period

Question 25

Net Present Value

Answer 25

Net Present Value = Sum of Present Values - Cost of Investment

Question 26

Variance

Answer 26

Variance = Actual Outcome - Budgeted Outcome

Question 27

Capacity utilisation

Answer 27

Capacity Utilisation = Actual Output / Productive Capacity * 100

Question 27

Labour productivity

Answer 27

Labour Productivity = Output / Labour Hours * 100

Question 28

Capital productivity

Answer 28

Capital Productivity = Output / Capital Hours * 100

Question 29

Productivity rate

Answer 29

Productivity Rate = Total Output / Total Input * 100

Question 30

Operating leverage

Answer 30

Operating Leverage = Total Contribution / Total Profit

Question 31

Free float

Answer 31

Free Float = Earliest start time of the next activity - the earliest start time of this activity - duration of this activity

Question 31

Total float

Answer 31

Total Float = Latest finish time - duration - earliest start time