Business formulas Flashcards
Profit
Profit = total revenue - total cost
Revenue
Revenue = selling price x quantity sold
Total cost
Total cost = variable costs + fixed costs
Gross profit
Gross profit = sales revenue - cost of sales/direct costs
Profit for the year
Profit for the year = operating profit +/- interest ( net finance which refers to the difference between interest earned and interest paid)- taxation - one off items
Operating profit
Operating profit = gross profit - expenses/indirect costs
Said to be the best measure of a businesses performance (managers can use this measure to improve performance)
Break even output
Break even output = Fixed costs/
Contribution per unit
Contribution per unit
Contribution per unit = selling price per unit - variable cost per unit
Total contribution
Total contribution = contribution per unit x numbers of units
Total contribution
Total contribution = total revenue - total variable cost
Margin of safety
Margin of safety = actual output - break even output
Profit
Profit = margin of safety x contribution per unit
Market capitalisation
Number of shares issued x share price
Closing balance
Net cash flow + opening balance
Net cash flow
Total cash inflows - total cash outflows
Closing balance for last month is opening balance for next month
Closing balance for last month is opening balance for next month
Margin of Profit
current sales level - break even point/current sales level x 100
percentage change
change/original x 100
market share (%)
sales of one product or brand or business/ total sales in the market x 100
market growth (%)
change in the size of the market over a period of time/ original size of the market x 100
price elasticity of demand (PED)
change in quantity demanded %/ change in price %
gross profit margin
gross profit/ sales (revenue) x 100
operating profit margin
operating profit/ sales (revenue) x 100
profit for the year margin
profit for the year/ sales (revenue) x 100
