BUSINESS FORMULAS Flashcards
total contribution
total revenue - total variable costs
contribution per unit
selling price (per unit) - variable costs (per unit)
break even point
fixed costs / contributions per unit
margin of safety
actual level of output - breakeven level of output
market capitalisation
n.o issued shares x current share price
labour productivity
output per time period / n.o employees
Return on investment (%)
return on investment (£) / cost of investment (£) x 100
gross profit
sales revenue - cost of sales
gross profit margin (%)
gross profit / sales revenue x 100
operating profit
gross profit - expenses
operating profit margin (%)
operating profit / sales revenue x 100
profit margin for the year (%)
profit for the year / sales revenue x 100
percentage change in profit
current years profit - previous years / previous years profit x 100
labour costs per unit
labour costs / units of output sold
market growth (%)
change in market size over a period / original size of the market x 100
market share (%)
sales of one product or brand or business / total sales in the market
variance
budgeted figure - actual figure
current ratio
current assets / current liabilities
gearing
non-current liabilities / total equity + non-current liabilities x 100
labour turnover
employees leaving / employees employed x 100
total equity
assets - liabilities
receivable days
receivables / revenue x 365
payable days
payables / cost of sales x 365
capacity utilisation
actual output / max output x 100
inventory turnover
cost of sales / average inventories held
unit costs
total costs / units of output
variable costs
variable costs per unit x number of units sold
added value
sales revenue - cost of brought in goods + services
return on capital investment (ROCE)
operating profit / total equity + non-current liabilities x 100
average rate of return (%)
average annual return / initial cost of project x 100
