Calculations

Question 1

Break even

Answer 1

Fixed costs/ selling price per unit - variable cost per unit

Question 2

Labour turnover

Answer 2

Staff leaving/ staff employed x100

Question 3

Variance

Answer 3

Budgeted figure- actual figure

Question 4

AAR (%)

Answer 4

Average annual return/ initial cost x100

Question 5

Inventory turnover

Answer 5

Cost of sales/ average inventory held

Question 6

Receivables days

Answer 6

Receivables/ revenue x 365

Breaks down the average time it takes company’s customers to pay their invoices

Question 7

Payable days

Answer 7

Payables/cost of sales x365

Average time it takes a company to pay its bills

Question 8

Gearing (%)

Answer 8

Non current liabilities/total equity+non current liabilities x100

How much a company is funded by debt

High gearing 50% plus

Question 9

ROCE

Answer 9

operating profit/ total equity + non current liabilities(CE) x100

Analyses how well a company puts it capital to use

Question 10

Re order level

Answer 10

Average demand x lead time

Question 11

Labour productivity

Answer 11

Output per employee

Question 12

Payback period

Answer 12

Initial outlay of investment/ cash flow

Question 13

ROI

Answer 13

Revenue / cost of investment

Question 14

Current ratio

Answer 14

Current assets/ current liabilities

Ability for a firm to pay its short term obligations due within one year

Question 15

Market capitalisation

Answer 15

Number of shares issued x share price

Question 16

Variable costs

Answer 16

Variable cost per unit x units sold

Question 17

Gross profit margin

Answer 17

Gross profit / revenue x 100

Question 18

Operating profit margin

Answer 18

Operating profit / revenue x100

Question 19

Contribution per unit

Answer 19

Selling price - variable cost per unit

Question 20

Labour cost per unit

Answer 20

Labour costs / units of output

Question 21

Capital employed

Answer 21

Total equity + non current liabilities
Or
Total assets - current liabilities

Question 22

AAR extended formula

Answer 22

1) find out total return

2) take away total return from IC

3) divide it by years

4) use that number to divide by initial cost and x100

Question 23

Acid test

Answer 23

(Current assets - inventory)/ current liabilities

Question 24

Profit

Answer 24

Contribution minus fixed costs

Question 25

Re order level

Answer 25

Max Q - min Q