Business formulas

Question 1

What is the formual for Total variable costs?

Answer 1

Variable Costs per unit X Nb of units sold

Question 2

What is the formula for sales growth (%)?

Answer 2

(Sales this year-Sales last year/Sales alast year) X 100

Question 3

What is the formula for Income elasticity of demand?

Answer 3

%Change in quantity demanded/%Change in real income

Question 4

What is the formula for capacity utilisation (%)?

Answer 4

(Actual output/maximum possible output) X 100

Question 5

What is the formula for unit costs (average costs)?

Answer 5

Total costs/Number of units of output

Question 6

What is the formula for return on investment (%)?

Answer 6

(Profit from the investment/cost of the investment) X 100

Question 7

What is the formula for the % change in profit?

Answer 7

(This years profit-Last years profit/Last years profit) X 100

Question 8

What is the formula for gross profit?

Answer 8

Revenue-cost of sale

Question 9

What is the formula for operating profit?

Answer 9

Gross profit-expenses

Question 10

What is the formula for profit of the year?

Answer 10

All profit-financial expenses

Question 11

What is the formula for gross profit margin?

Answer 11

(Gross profit/revenue) X 100

Question 12

What is the formula for operating profit margin?

Answer 12

(operating profit/revenue) X 100

Question 13

What is the formula for profit for the year margin?

Answer 13

(Profit for the year/revenue) X 100

Question 14

What is the formula for break even?

Answer 14

Fixed cost/contribution per unit

Question 15

What is the formula for margin of safety?

Answer 15

Actual output level-break even level of output

Question 16

What is the formula for total contribution?

Answer 16

Contribution per unit X output
OR
Total revenue - Total variable cost

Question 17

What is the formula for contribution per unit?

Answer 17

Selling price per unit-variable cost per unit

Question 18

What is the formula for labour costs per unit?

Answer 18

Labour costs/Units of output

Question 19

What is the formula for employee costs as % of turnover?

Answer 19

(Employee costs/Sales turnover) X 100

Question 20

What is the formula for labour turnover (%)?

Answer 20

(Nb of staff leaving/Nb of staff employed) X 100

Question 21

What is the formula for labour retention (%)?

Answer 21

(Nb of staff employed at the end of period-Nb or leavers/Nb of staff employed at start of period) X 100

Question 22

What is the formula for net profit margin?

Answer 22

(Net profit/revenue) X 100

Question 23

What is the formula for variance?

Answer 23

Budgeted figure-actual figure

Question 24

What is the formula for added value?

Answer 24

Sales revenue-Costs of bought in goods and services

Question 25

What is the formula for net cash flow?

Answer 25

Total inflows-total outflows

Question 26

What is the formula for net current assets?

Answer 26

Current assets-Current liabilities

Question 27

What is the formula for capital employed?

Answer 27

Equity+Non current liabilities

Question 28

What is the formula for return on capital employed (ROCE)(%)?

Answer 28

(Operating profit/Total equity+non-current liabilities) X 100

Question 29

What is the formula for current ratio?

Answer 29

Current assets/current liabilities

Question 30

What is the formula for gearing?

Answer 30

(Non current liabilities/total equity+non current liabilities) X 100

Question 31

What is the formula for inventory turnover?

Answer 31

Cost of goods sold/average inventories held

To find days, divide by 365

Question 32

What is the formula for payable days?

Answer 32

(Payables/costs of sales) X 365

Question 33

What is the formula for receivable days?

Answer 33

(receivables/revenue) X 365