BUSSINESS CALCULATIONS REVISION

Question 1

Revenue (Sales or Turnover)

Answer 1

Selling price per unit × Number of units sold

Question 2

Variable costs (Total variable costs)

Answer 2

Variable cost per unit × Number of units sold

Question 3

Total costs

Answer 3

Fixed costs + Variable costs

Question 4

Profit

Answer 4

Total revenue − Total costs OR

Total contribution − Fixed costs

Question 5

Market capitalisation of a business

Answer 5

Number of issued shares × Current share price

Question 6

Expected value of a decision with two possible outcomes - Decision tress

Answer 6

[Pay-off of A × probability of A] + [Pay-off of B × probability of B]

Question 7

Net gain

Answer 7

Expected value − Initial cost of decision

Question 8

Market growth (%)

Answer 8

Change in the size of the market over a period

/Original size of the market × 100

Question 9

Market share (%)

Answer 9

Sales of one product OR brand OR business

Total sales in the market × 100

Question 10

Added value

Answer 10

Sales revenue − costs of bought-in goods and services

Question 11

Labour productivity

Answer 11

Output over a time period/Number of employees

Question 12

Unit costs

Answer 12

Total costs/Number of units of output

Question 13

Capacity utilisation (%)

Answer 13

Actual output/Maximum possible output × 100

Question 14

Return on investment (%)

Answer 14

Profit from the investment (£)/Cost of the investment (£) × 100

Question 15

Gross Profit

Answer 15

Revenue − Cost of Sales

Question 16

Profit from Operations

Answer 16

Operating profit =Gross profit − Operating Expenses

Question 17

Profit for year

Answer 17

Operating profit + Profit from other activities − Net finance costs − Tax

Question 18

Gross profit margin (%)

Answer 18

Gross profit/Revenue × 100

Question 19

Profit from operations margin = Operating profit margin (%)

Answer 19

Operating profit/Revenue × 100

Question 20

Profit for year margin (%)

Answer 20

Profit for year/Revenue × 100

Question 21

Variance

Answer 21

Budgeted figure – actual figure

Question 22

Contribution per unit

Answer 22

Selling price − Variable costs per unit

Question 23

Total contribution

Answer 23

Contribution per unit × Units sold
OR
Total revenue − Total variable costs

Question 24

Break-even output

Answer 24

Fixed costs/Contribution per unit

Question 25

Margin of safety

Answer 25

Actual level of output − Break-even level of output

Question 26

Labour turnover (%)

Answer 26

Number of staff leaving/Number of staff employed by the business × 100

Question 27

Employee retention rate (%) for a particular time period

Answer 27

Number of employees who remained with the businessfor the whole period of time/Number of employees at start of the time period ×100

Question 28

Employee costs as percentage of turnover

Answer 28

Employee costs/Turnover × 100

Question 29

Labour cost per unit

Answer 29

Labour costs/Units of output

Question 30

Return on capital employed (ROCE)(%)

Answer 30

Operating profit/Total equity + non-current liabilities × 100

Question 31

Current ratio

Answer 31

Current assets/Current liabilities

Question 32

Gearing (%)

Answer 32

Non-current liabilities/Total equity + non-current liabilities ×100
Where total equity + non-current liabilities = capital employed

Question 33

Payables days

Answer 33

Payables/Cost of sales × 365

Question 34

Receivables days

Answer 34

Receivables/Revenue × 365

Question 35

Inventory turnover

Answer 35

Cost of sales/Average inventories held

Question 36

Average rate of return (%)

Answer 36

Average annual return (£)/Initial cost of project (£) × 100