business formulas Flashcards
this deck rule
somthing above somthing with no line means divide
x100 or somthing on the next few lines means do after
Inventory turnover =
Cost of sales
Average inventories held
Receivables days =
Receivables
Revenue
× 365
Payables days =
Payables
Cost of sales
× 365
Average rate of return (%) =
Average annual return (£)
Initial cost of project (£)
x100
Gearing (%) =
Non-current liabilities
Total equity + non-current liabilities
×100
Where total equity + non-current liabilities = capital employed
Current ratio =
Current assets
Current liabilities
Return on capital employed (ROCE)(%) =
Operating profit
Total equity + non-current liabilities
× 100
Where total equity + non-current liabilities = capital employed
Labour cost per unit =
Labour costs
Units of output
Employee costs as percentage of turnover =
Employee costs
Turnover
× 100
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 the time period
x100
Labour turnover (%) =
Number of staff leaving
Number of staff employed by the business
× 100
Break-even output =
Fixed costs
Contribution per unit
Margin of safety =
Actual level of output − Break-even level of output
Total contribution =
Contribution per unit × Units sold
or
Total revenue − Total variable costs
Contribution per unit =
Selling price − Variable costs per unit
Variance =
Budgeted figure – actual figure
Gross profit margin (%) =
Gross profit
Revenue
× 100
Profit from operations margin = Operating profit margin (%) =
Operating profit
Revenue
× 100
Profit for year margin (%) =
Profit for year
Revenue × 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
Return on investment (%) =
Profit from the investment (£)
Cost of the investment (£)
× 100
Capacity utilisation (%) =
Actual output
Maximum possible output
× 100
Unit costs (average costs)=
Total costs
Number of units of output
Labour productivity =
Output over a time period
Number of employees
Added value =
Sales revenue − costs of bought-in goods and services
Market share (%) =
Sales of one product OR brand OR business
Total sales in the market
× 100
Market growth (%) =
Change in the size of the market over a period
Original size of the market
× 100
Net gain =
Expected value − Initial cost of decision
Expected value of a decision with two possible outcomes eg. A & B =
A & B =
(Pay-off of A × probability of A) + (Pay-off of B × probability of B)
Market capitalisation of a business =
Number of issued shares × Current share price
Revenue (Sales or Turnover) =
Selling price per unit × Number of units sold
Variable costs (Total variable costs) =
Variable cost per unit × Number of units sold
Total costs =
Fixed costs + Variable costs
Profit =
Total revenue − Total costs OR
Total contribution − Fixed costs
