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
