Calculation Equations

Question 1

Total costs

Answer 1

TC (total cost) = TFC (total fixed costs) + TVC (total variable costs)

Question 2

Revenue

Answer 2

Revenue = price × quantity

Question 3

Break even point in units

Answer 3

Break even point in units = (sales price - variable cost)

Question 4

Break even

Answer 4

break even point in units= fixed cost/ (sales price - variable cost)
OR
break even points in units x sales price

Question 5

Margin of safety

Answer 5

Margin of safety = actual or budgeted sales - break even sales

Question 6

Interest (on loans)

Answer 6

Interest (on loans) in % = total repayment - borrowed amount/ borrowed amount × 100

Question 7

Net cash-flow

Answer 7

Net cash-flow = cash inflows - cash outflows in a given period

Question 8

Opening balance

Answer 8

Opening balance = closing balance of the previous period

Question 9

Closing balance

Answer 9

Closing balance = opening balance + net cash-flow

Question 10

Gross profit

Answer 10

Gross profit = sales revenue - cost of sales

Question 11

Gross profit margin (%)

Answer 11

Gross profit margin (%) = sales revenue × 100

Question 12

Net profit

Answer 12

Net profit = gross profit - other operating expenses and interest

Question 13

Net profit margin (%)

Answer 13

Net profit margin (%)= net profit / sales revenue × 100

Question 14

Average rate of return (%)

Answer 14

Average rate of return (%) = average annual profit (total profit / no. of years) × 100 / cost of investment