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Business A Level > Calculations > Flashcards

Calculations Flashcards

1
Q

Market share

A

Business sales
———————— x 100
total market sales

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2
Q

Total variable costs

A

Number of units sold x variable costs per
unit

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3
Q

Total costs

A

Fixed costs + variable costs

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4
Q

Sales revenue

A

Number of units sold x unit price

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5
Q

Sales volume

A

Units x period of time

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6
Q

Price elasticity of demand (PED)

A

% change in quantity demanded
——————————————
% change in price

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7
Q

Income elasticity of demand (YED)

A

% change in quantity demanded
——————————————
% change in income

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8
Q

Gross profit

A

Sales revenue - cost of sales

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9
Q

Operating profit

A

Gross profit - operating expenses

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10
Q

Net profit

A

Operating profit - interest OR tax

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11
Q

Gross profit margin

A

Gross profit
—————— x 100
Sales revenue

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12
Q

Operating profit margin

A

Operating profit
———————— x 100
Sales revenue

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13
Q

Net profit margin

A

Net profit
————— x 100
Sales revenue

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14
Q

Break even

A

Fixed costs
———————
Contribution per unit

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15
Q

Contribution per unit

A

Selling price - variable costs per unit
per unit

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16
Q

Total contribution

A

Contribution x number of units sold
per unit

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17
Q

Margin of safety

A

Actual or - break even sales
budgeted
sales

18
Q

Midpoint of margin of safety

A

(Break even + total units sold)
——————————————
2

19
Q

Current ratio

A

Current assets
———————
Current liabilities

20
Q

Acid test ratio

A

(Current assets - stock)
——————————-
Current liabilities

21
Q

Working capital

A

Current assets - current liabilities

22
Q

Net cash flow

A

Total inflows - total outflows

23
Q

Variance

A

Actual - Budget

24
Q

Productivity (Labour)

A

Output per period (units)
————————————
Number of employees

25
Q

Capacity utilisation

A

Actual level of output
—————————— x 100
Maximum possible output

26
Q

Average rate of return

A

Average net cash flow for the lift of the project
————————————————- x 100
Project cost (initial investment amount)

27
Q

Return on capital employed (ROCE)

A

Operating profit
———————— x 100
Capital employed

28
Q

% change

A

New - old
————- x 100
Old

29
Q

Calculating a 3-period moving average

A

Example:
2008 - 500
2009 - 770
2010 - 900

500 + 770 + 900
———————- = 723.3
3

30
Q

Calculating a 4-quarter moving average

A

Same thing as 3 but with 4 pieces of data

Example:
600 + 700 + 850 + 350
——————————- = 625
4

31
Q

Payback calculation

A

Example:
Proposal 1 costs £120000

Paid back in two years because
Year 1 = £80,000
Year 2 = £40,000

BUT
Proposal 2 costs £95,000 and makes £90,000 but year 3
Year 4 = £60,000 so only £5000 needed

5000
——— x 12 = 0.9 (round this up to 1)
60000

32
Q

Average rate of return (investment appraisal version)

A
  1. Add up all the cash inflows from the all the years
  2. Minus the original cost of the project
  3. Then divide this by the number of years the project runs for.
  4. Now take this figure and divide it by the cost of the project so e.g., 50/70 x 100
33
Q

Net present value (NPV)

A

Example:
Discount is 20% so multiple each cash flow by the discount

Year 0 = 120000 x 1.00 = 120000
Year 1 = 80000 x 0.80 = 64000
Year 2 = 40000 x 0.64 = 25600

To get 0.64 it’s 20% x 0.8 = 0.16 and then minus the 0.16 from 0.8

NPV is all the NPY values added together minus the total cost

34
Q

Decision trees

A
  1. Start with a decision point
  2. Add two decisions
  3. Add chance modes to the decisions (A and B)
  4. Add profitability data
  5. Add the expect loss and profit from each decision
  6. Calculate expect outcome:
    Success value x profit + failure x loss
    E.g., 0.2 x 15M + 0.8 x - 2M = £1.4M

BUT
If the costs of the projects are given to you at the beginning then:
- add together the outcomes and then minus the cost of the project
E.g., 15M + - 2M = 13M
13M - 1M = £12M in profit

35
Q

CPA diagrams

A

EST = earliest start time (top right)
LFT = lastest finish time (bottom right)

The lines between the nodes say the duration of the task

For the next EST add the duration days to the previous EST
E.g., Node 1 = 0 EST + duration of 3 days = Node 2 = 3 EST (adding the days forward)
ALWAYS TAKE THE LONGEST EST

LFT = minusing the day so Node 9 = 68 LFT duration = 4 days so Node 8 = 64 LFT

36
Q

CPA diagram: Float time

A

Float time = LFT - duration - EST

37
Q

Gearing ratio

A

Non-current liabilities
——————————— x 100
Capital employed

38
Q

Labour productivity

A

Total output
—————————
Number of workers

39
Q

Labour turnover

A

Number of employees leaving
——————————————— x 100
Average number of employees

40
Q

Absenteeism

A

Number of work days lost from absence
————————————————- x 100
Total possible days worked

41
Q

Capital employed

A

Non-current assets + total equity

Business A Level (6 decks)

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