Business Studies Equations Flashcards
Total costs
Fixed + Variable costs
Unit costs
Total cost/ Output
Revenue
Price x Quantity sold
Contribution per unit
Price - Variable costs
Break even
Fixed costs/ contribution
Margin of safety
Actual sales - Break even sales
Average rate of return
Annual average profit/ Cost of investment x 100
Net cash flow
Total inflows - Total outflows
Gross profit
Sales revenue - Cost of sales
Operating profit
Gross profit - Expenses
Profit before tax
Operating profit - Finance costs
Profit for the year (retained profit)
Net profit- Tax and dividends
Net current assets (Working capital)
Current assets- Current liabilities
Net assets
Total assets (Current assets + Non current assets) - Current liabilities - Non current liabilities
Straight line depreciation
Initial cost - Residual value/ life of asset
Current ratio
Current assets/ Current liabilities
Acid test
Current assets - Inventory (stock)/ Current liabilities
Gearing
Non current liabilities/ Capital employed x 100
Debt to equity ratio
Debt/ equity x 100
Interest cover
Operating profit/ Interest Payable (finance costs)
Asset turnover
Revenue/ Non-current assets
Stock turnover
Cost of stock/ Average stock
Debtor days
Trade receivables/ revenue x 365
Creditor days
Trade payables/ revenue x 365
Gross profit margin
Gross profit/ Sales revenue x 100
Net profit margin
Net profit/ sales revenue x 100
ROCE (return on capital employed)
Operating profit/ Capital employed x 100
Return on equity
Profit for the year/ Shareholders equity
Dividend per share
Total dividends paid/ Number of shares issued
Dividend yield
Dividend per share/ Market price of share x 100
Earnings per share
Profit for the year/ Number of shares issued
Price earning ratio
Market price of share/ Earnings per share
