Business Formulas Flashcards
Total costs
Fixed costs + variable costs
Profit
Total revenue - total costs
Total variable costs
Variable cost per unit x number of units sold
Total revenue
Selling price x units sold
Market capitalisation
Number of issues shared x current share price
Expected value
Probability of A x possible outcome of A
+
Probability of B x possible outcome of B
Net gain (decision tree)
Expected value - cost of decision
Market size (volume)
Quantity of goods and services produced in a particular market over a period of time (usually a year)
Market size (value)
Total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time (usually a year
Sales volume
The quantity of goods and services produced by a particular business over a period of time (usually a year)
Sales value
The total sales revenue of a particular business over a period of time (usually a year)
Market growth (%) in year ‘X’
Change in sales of the market between year (x-1) and year x
/
Size of the market in year (x-1)
X 100
Sales (%) in year ‘x’
Change in sales of product or business between year (x-1) and year x
/
Sales of product or business in year (x-1)
X 100
Market share (%)
Sales of one product or brand or business
/
Total sales in the market
X 100
Added value
Sales revenue - costs of bought in goods and services
Labour productivity
Output per time period
/
No of employees
Unit costs (average costs)
Total costs of production
/
No of units of output produced
Capacity utilisation
Actual output in time period
/
Max possible output in time period
X 100
Return on investment (%)
Return on investment
/
Cost of investment
X 100
Gross profit
Sales revenue - cost of sales
Operating profit
Sales revenue - cost of sales - operating expenses
Profit for the year
Operating profit + profit from other activities - net finance costs - tax
Variance
The difference between the budgeted figure and the actual figure
Contribution per unit
Selling price - variable costs per unit
Total contribution
= contribution per unit x units sold
OR
= total revenue - total variable costs
Break even output
Fixed costs
/
Contribution per unit
Margin of safety
Actual level of output - breakeven level of output
Gross profit margin (%)
Gross profit
/
Sales revenue
X100
Operating profit margin (%)
Operating profit
/
Sales revenue
X100
Profit for the year margin (%)
Profit for the year
/
Sales revenue
X100
Labour turnover (%)
No of staff leaving during year
/
Av no of staff employed during year
X100
Employee retention rate (%) for particular time period
No of employees at end of period - no of leavers
/
Number of employees at the end of the period
X 100
Employee costs as a percentage of turnover
Employee costs
/
Sales turnover
X 100
Labour costs per unit
Labour costs
/
Units of output
Current ratio
Current assets
/
Current liabilities
Inventory turnover
Cost of goods sold
/
Av inventories held
Average rate of return (%)
Net return from project or number of years
/
Initial cost of project
X 100
