Business formulas Flashcards
Total cost formula
Total cost = fixed costs + variable costs
Profit formula
Profit = total revenue - total costs
Profit = total contribution - fixed costs
Total variable cost formula
Total variable cost = variable cost per unit x number of units sold
Sales revenue or turnover formula
Sales revenue = selling price per unit x number of units sold
Market capitalisation formula
Market capitalisation = number of issued shares x current share price
Expected value of a decision tree with two possible outcomes (A&B)
(Pay off of A x probability of A) + (pay off of B x probability of B)
Net gain formula in decision tree
Net gain = expected value - initial cost of decision tree
What is market size volume?
The quantity of goods and services produced in a particular market over a period of time usually one year
What is market size (value)?
The total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time
What is sales volume?
The quantity of goods and services produced by a particular business over a period of time.
What is sales value?
The total sales revenue of a particular business over a period of time
Market growth % in a year formula
Change in market size between year(x-1) and year x / size of market in year (x-1) x 100
Sales growth % in year x formula
Change in sales of product or business between year(x-1) and year x / sale of product or business in year(x-1) x 100
Market share % formula
Sales of one product or brand or business / total sales in the market x 100
Price elasticity of demand formula
percentage change in quantity demanded / percentage change in price x 100
Labour productivity formula
Output per time period / number of employees
Added value formula
added value = sales revenue - costs of bought in goods and services
Unit costs (average costs) formula
total costs of production / number of units of output produced
Capacity utilisation formula
actual output in a given time period / maximum possible output in a given time period x 100
Return on investment (%) formula
return on investment / cost of investment x 100
Gross profit formula
Gross profit = sales revenue - cost of sales
Profit from operations formula
Operating profit = sales revenue - cost of sales - operating expenses
Profit for the year formula
Profit for the year = operating profit + profit from other activities - net finance costs - tax
What is variance?
The difference between an actual and budgeted figure.
Favourable variance: actual sales or profit higher than budget or costs are lower than budget.
Adverse variance: actual sales or profits are lower than budget or costs are higher that budget.
