calculations

Question 1

Total Costs

Answer 1

Fixed costs + Variable costs

Question 2

Profit

Answer 2

Total revenue - Total costs

Question 3

Total Variable Costs

Answer 3

Variable cost per unit x No. of units sold

Question 4

Sales revenue / Turnover

Answer 4

Selling price per unit x No. of units sold

Question 5

Market Capitalisation of a business

Answer 5

No. of issues shared x Current share price

Question 6

Expected value of a decision with two possible outcomes (A & B)

Answer 6

(A pay-off x A probability) + (B pay-off x B probability)

N.B probability of A + Probability of B = 1.0

Question 7

In a decision tree Net gain

Answer 7

Expected value - Initial cost of decision

Question 8

Market size volume

Answer 8

the quantity of goods and services produced in a particular market over a period of time, usually one year

Question 9

Market size (value)

Answer 9

is the total sales revenue from selling all of the goods and services produced in a particular market over a period of time, usually one year

Question 10

sales volume

Answer 10

is the quantity of goods and services produced by a particular business over a period of time, usually one year

Question 11

sales value

Answer 11

the total sales revenue of a particular business over a period of time, usually one year

Question 12

Market growth (%) in year ‘X’

Answer 12

Change in the size of the market between year (X-1) and year X
————————————————————x100
Size of the market in year (X-1)

Question 13

Sales growth (%) in year ‘X’

Answer 13

Change in sales of product or business between (X-1) and year X
————————————————————x100
Sales of product or business in year (X-1)

Question 14

Market share (%)

Answer 14

Sales of one product / brand / business
————————————————————x100
total sales in the market

Question 15

Added value (value added)
(additional features or economic value that a company adds to its products and services)

Answer 15

Sales revenue - costs of bought-in goods and services

Question 16

Labour productivity

Answer 16

No. of employees

Question 17

Unit costs (average costs)

Answer 17

Number of units produced

Question 18

Capacity utilisation (%)

Answer 18

Actual output in a given time period
————————————————————x100
Maximum possible output in a given time period

Question 19

Return on investment (%)

ROI

Answer 19

Net profit
————————————————————x100
Cost of investment (£)

Question 20

Gross profit

Answer 20

Sales Revenue - Cost of Sales

Question 21

Profit from operations = Operating profit

Answer 21

Sales revenue -
Cost of sales -
Operating expenses

Question 22

Variance

Answer 22

The difference between and an actual and a budgeted figure

Question 23

Favourable variance

Answer 23

actual sales or profits are higher than budget, or costs are lower than budget

Question 24

Adverse variance

Answer 24

actual sales or profits are lower than budget, or costs are higher than budget

Question 25

Contribution per unit

Answer 25

Selling price - variable costs per unit

Question 26

Total contribution

Answer 26

contribution per unit x units produced or sold OR total revenue - total variable costs

Question 27

what is variance?

Answer 27

Variance is the difference between the budgeted costs and the actual costs

Question 28

Break-even output

Answer 28

Fixed costs (£) ------------------------------------------------------------ Contribution per Unit (£)

Question 29

What is break-even output on a break-even chart?

Answer 29

the level of output ar which total revenue is equal to total costs

Question 30

where is the level of profit at a given level of output on a break-even chart?

Answer 30

after the break-even point

Question 31

margin of safety

Answer 31

actual level of output - breakeven level of output

Question 32

gross profit margin (%)

Answer 32

gross profit ------------------------------------------------------------x100 sales revenue

Question 33

Operating profit margin (%)

Answer 33

Operating profit ------------------------------------------------------------x100 Sales revenue

Question 34

Profit for year margin (%)

Answer 34

Profit for the year ------------------------------------------------------------x100 Sales revenue

Question 35

Labour turnover (%)

Answer 35

Number of staff leaving during year ------------------------------------------------------------x100 Average no. of staff employed during year

Question 36

Employee retention rates (%)

Answer 36

No. of staff who stay throughout the year ------------------------------------------------------------x100 Average number of staff employed by the business during the year

Question 37

Employee costs as percentage of turnover

Answer 37

Employee costs ------------------------------------------------------------x100 Sales revenue

Question 38

Labour cost per unit

Answer 38

Labour costs ------------------------------------------------------------ Units of output

Question 39

Return on capital employed (ROCE) (%)

Answer 39

Operating profit ------------------------------------------------------------x100 Total equity + non-current liabilities (=capital employed)

Question 40

Current ratio

Answer 40

Current assets ------------------------------------------------------------ Current liabilities

Question 41

Gearing (%)

Answer 41

Non-current liabilities ------------------------------------------------------------x100 Total equity + non-current liabilities (=capital employed)

Question 42

Payables days

Answer 42

Payables ---------------------x365 Cost of Sales

Question 43

Receivables Days

Answer 43

Receivables ------------------------x100 Sales Revenue

Question 44

Average rate of return (ARR) (%)

Answer 44

Net return from project (£) / (number of years) ------------------------------------------------------------x100 Initial cost of project (£)

Question 45

Net present value (NPV)

Answer 45

total present value - initial outlay

Question 46

Capital employed (3 ways)

Answer 46

1. Total equity + non-current liabilities 2. fixed assets + working capital 3. current liabilities - total assets