Business studies formula Flashcards
Revenue definition
The amount of income a business will earn over a period of time
profit definition
the amount of money left after paying costs over a period of time (profit or loss is the difference between revenue and costs over a period of time
Formula for revenue
Total revenue= price of one item x quantity
Profit formula
Revenue- total costs
cash flow
the money that flows in and out of a business (NOT PROFIT)
Total expenditure formula
opening balance- closing balance
net cash flow formula
cash inflow - cash out flow
net cash flow def
the difference between cash inflow and cash outflow over a period of time. Your final figure.
opening balance definition
the money you have at the beginning of the month (bank balance at start)
opening balance formula
closing balance - net cash flow
closing balance definition
the money you have at the end of the month the money you have at the beginning of the month (bank balance at end)
closing balance formula
opening balance + net cash flow
break even
How many sales you would need to make to get to the point where:
total costs = revenue
cash inflow def
Money flowing into a business (e.g. sales, extra money makers like renting space out to ppl etc)
cash inflow formula
net cash flow + cash outflow
cash out flow def
Money flowing out of a business (e.g. loans, costs in production, etc)
cash out flow formula
cash inflow - net cash flow
break even point formula
fixed costs/ contribution
margin of safety def
the difference between the current sales level output and the break even output
margin of safety formula
actual sales - break-even sales
variable costs formula
total costs - fixed costs
OR
v= -f/b+s which is ( -fixed costs/ break even point )+ selling price
variable costs def
the costs that change over time , e.g wages, prices of raw materials,
fixed costs def
the costs that stay the same , e.g. salaries, rent of space, insurance
fixed costs formula
total costs - variable costs
OR
fixed costs = contribution x break even point
total costs
fixed costs + variable cost
contribution
selling price - variable costs
profit/ loss from breakeven
margin of safety x contribution
cost of sales formula
opening stock + purchases- closing stock
gross profit formula
sales revenue - cost of sales
net profit formula
gross profit - expenses
gross profit margin formula
gross profit/ revenue x 100
net profit margin formula
net profit/ revenue x 100
average yearly profit
total profit/ no. of years
ARR (avrg rate of return)
avrg yearly profit/ initial cost of investment x 100
