Business Formulas Flashcards
Revenue
Selling price per unit x Number of Units Sold
Variable Costs
Variable Costs per unit x number of units sold
Total Costs
Fixed Costs + Variable Costs
Profit
Total Revenue - Total Costs
Market Capitalisation
Number of Shares Issued x Share Price
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)
Net Gain
Expected Value - Initial Cost of Decision
Market Growth
(Change in size of the Market over a period / Original Size of market) x 100
Market Share
(Sale of one product or brand or business/Total Sales in the Market) x 100
Added Value
Sales Revenue - cost of brought-in goods and services
Labour productivity
Output over a time period / number of employees
Unit Costs
Total costs / Number of Units of Output
Capacity Utilisation
(Actual Output / Maximum possible output) x 100
Return on investment
(Profit from the investment / Cost of the investment) x 100
Gross Profit
Revenue - cost of sales
Profit from Operations (Operating profit)
Gross profit - Operating Expenses
Profit for Year
Operating profit + Profit from other activities - Net finance costs - tax
Gross Profit Margin
(Gross Profit / Revenue) x 100
Operating Profit Margin
(Operating Profit / Revenue) x 100
Profit for Year Margin
(Profit for Year / Revenue) x 100
Variance
Budgeted figure - actual figure
Contribution Per Unit
Selling Price - Variable Costs Per Unit
Total Contribution 1
Contribution per Unit x Units sold
Total Contribution 2
Total Revenue - Total Variable Costs
Break-even output
Fixed costs / Contribution per unit
Margin of Safety
Actual level of output - Break-even Level of Output
Labour Turnover
(Number of Staff Leaving / Number of staff employed in the business) x 100
Employee Retention Rate
(Number of Employees Who Stayed in a time period / Number Who started) x 100
Employee costs as a percentage of turnover
(Employee costs / turnover) x 100
Labour Costs per Unit
Employee Costs / Units of output
ROCE
(Operating Profit / (Total Equity + Non-current liabilities)) x 100
Current Ratio
Current Assets / Current Liabilities
Gearing
(Non- Current Liabilities / Capital Employed) x 100
Capital Employed
Total equity - non-current liabilities
Payable Days
(Payables / Cost of Sales) x 365
Receivable Days
(Receivables / Revenue) x 365
Inventory Turnover
Cost of sales / Average inventories held
