business formulas Flashcards
current ratio
current assets divided by current liabilities
gearing
non current liabilities divided by total equity + non current liabilities x100
payables days
payables divided by cost of sales x365
recievables days
recievables divided by revenue x365
inventory turnover
cost of sales divided by average inventories held
average rate of return
average annual retrun divided by initial cost of project x100
revenue
selling price x number of units sold
variable costs
variable cost 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 current 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 if market over a period divided by original size of market x100
market share
sales of one product or brand or business divided by total sales in the market x100
added value
sales revenue - cost of bought in goods and services
labour productivity
output over a time period divided by number of employees
unit costs (average costs)
total costs divided by number of units of output
capacity utilisation
actual output divided by maximum possible output x100
return on investment
profit from the investment divided by cost of the investment x100
gross profit
revenue - cost of sales
profit from operations
operating profit= gross profit - operating expenses
profit for the year
operating profit - tax
gross profit margin
gross profit divided by revenue x100
operating profit margin
operating profit divided by revenue x100
profit for the year margin
profit for year divided by revenue x100
variance
budgeted figure - actual figure
contribution per unit
selling price - variable costs per unit
break even output
fixed costs divided by selling price - variable costs
margin of safety
actual level of output - break even level of output
labour turnover
number of staff leaving divided by number of staff employed by the business x100
employee retention rate
number of employees who remained in the business for a time period divided by number of employees at the start of the time period x100
employee costs as a % of turnover
employee costs divided by turnover x100
labour costs per unit
labour costs divided by units of output
return on capital employed
operating profit divided by total equity + non current liabilities x100
capital employed
total equity +non current liabilities
