Business Formulas Flashcards
What is the formula for revenue(sales or turnover)?
Revenue (Sales or Turnover) =
Selling price per unit × Number of units sold
What is the equation for total variable cost?
Variable costs (Total variable costs) = Variable cost per unit × Number of units sold
What’s the equation for total costs?
Total costs =
Fixed costs + Variable costs
What are the equations for profit?
Total revenue − Total costs
OR
Total contribution − Fixed costs
What’s the equation for market capitalisation?
Market capitalisation of a business = Number of issued shares × Current share price
What’s the formula for the expected value of a decision with 2 possible outcomes e.g. A&B?
Expected value of a decision with two possible outcomes eg. A & B = (Pay-off of A × probability of A)+ (Pay-off of B × probability of B)
What’s the formula for net gain?
Net gain =
Expected value − Initial cost of decision
What’s the formula for market share?
Market share(%)= (sales of 1 product or brand business/ total sales in a market) *100
What’s the formula for market growth?
Market growth (%) = (change in the size of the market over a period of time/ original size of the market) *100
What’s the formula for added value?
Added value= Sales revenue- cost of bought-in goods and services
What’s the formula for labour productivity?
Labour productivity = (Output over a time period/ Number of employees)
What’s there formula for unit cost(average cost)?
Unit cost = total cost/ number of units of output
What’s the formula for capacity utilisation?
(Actual output/maximum possible output)*100
What’s the formula for return on investment?
Return on investment = (profit from the investment / cost of investment )*100
What’s the formula for gross profit?
Revenue- cost of sales
What’s the formula for operating profit?
Gross profit - operating expenses
What’s the formula for profit of the year?
Operating profit+ profit from other activities - net finance costs - tax
What’s the formula for gross profit margin(%)?
(Gross profit/ revenue )*100
What’s the formula for operating profit margins?
(Operating profit/ revenue)*100
What’s the formula for variance?
Budgeted variance- actual variance
What’s the formula for contribution per unit?
Selling price- variable cost per unit
What are the formulas for total contribution?
Total contribution = Contribution per unit × Units sold
Total contribution =
Total revenue − Total variable costs
What’s the formula for break even output?
Fixed cost per unit/ contribution per unit
What’s the formula for margin of safety?
Actual level of output- break even level of output
What’s the formula for labour turnover?
(Number of staff leaving / number of staff employed by the business) *100
What’s the formula for employee retention rate?
Employee retention rate (%) for a particular time period =
(Number of employees who remained with the business for the whole period of time / number of employees at start of time period)×100
What’s the formula for employee costs as a percentage of turnover?
(Employee costs / turnover)*100
What’s the formula for labour costs per unit?
(Labour costs/ units of output)
What’s the formula for return in capital employed (ROCE)?
(Operating profit/ capital employed) *100
“Where captain employed is total equity + non current liabilities
What’s the formula for current ratio?
Current assets / current liabilities
What’s the formula for gearing?
(Non current liabilities / capital employed)*100
“ where capital employed is total equity + non current liabilities
What’s the formula for payable days?
(Payables/ cost of sales) * 365
what’s the formula for receivable days?
(receivables/revenue)*365
what’s the formula for inventory turnover?
(cost of sales/average inventories held)
whats’s the formula for average rate of return?
(average annual return/initial cost of project)*100
what’s the formula for net present value (NPV)?
net present value (NPV) = present value - cost of investment
how do you calculate present value?
discount factor * expected return
how do you calculate Average Rate of return?
total return/ number of years
-if its as a percentage then multiply it by 100
