Calculations

Question 1

Added value

Answer 1

difference between the cost of purchasing raw materials and the price for which the finished good is sold for.

Question 2

market share

Answer 2

Number of products sold by the business/ total market sales * 100

Question 3

margin of safety

Answer 3

The difference between output level and break even output

Question 4

Closing balance

Answer 4

net cash flow + opening balance.

Question 5

Breakeven formula

Answer 5

Break-even Output = Fixed Costs divided by the Contribution Per Unit.

Question 6

Revenue

Answer 6

Total Revenue = Quantity of Units Sold x Selling Price

Question 7

Profit

Answer 7

Revenue- costs

Question 8

contribution

Answer 8

selling price - variable costs

Question 9

Margin of safety

Answer 9

actual sales – break-even

Question 10

Capital productivity

Answer 10

Capital productivity = Output / Capital employed

Question 11

Reorder level

Answer 11

Reorder level = average demand × lead time

Question 12

Capacity utilisation

Answer 12

Actual output/max possible output x 100

Question 13

Net assets

Answer 13

((Total Current Assets + Total Fixed Assets) - (Total Current Liabilities + Long Term Liabilities))

Question 14

Capital employed

Answer 14

Shareholders capital+ retained profit+ long term liabilities

Or

Shareholder funds + long term liabilities

Question 15

Depreciation

Answer 15

Asset cost- residual value/ useful life of asset

Question 16

ROCE

Answer 16

Net profit/(shareholder funds + long term liabilities) x100

Question 17

PED

Answer 17

%change in quantity demanded / %change in price

Question 18

Percentage change

Answer 18

(New figure-old figure) /old figure x100

Question 19

Working capital

Answer 19

Current assets- current liabilities

Question 20

Current ratio

Answer 20

Current assets/ current liabilities : 1

Question 21

Acid test ratio

Answer 21

(Current assets- stock)/ current liabilities:1

Question 22

Gearing ratio

Answer 22

Long term liability/ capital employed x100

Question 23

Shareholder’s capital
aka Shareholder’s funds

Answer 23

Share Capital + reserves

Question 24

Payback period

Answer 24

Calculate cumulative cash flow
Then, divide cash flow per year in the remaining month by 12
Then, divide amount outstanding by the monthly cash flow

Question 25

ARR

Answer 25

Average profit per annum/Initial investment cost x100

Question 26

Discounted cash flow aka Net Present Value

Answer 26

Multiply each annual cash flow by the discount factor then, add all years together to get Total Present Value then, subtract the initial cost to get the Net Present Value then, Net Present Value/ number of years then, divide by the initial cost and x 100.

Question 27

Index numbers

Answer 27

Value in period/Value in base period x100

Question 28

Cost benefit analysis

Answer 28

Social benefit -social cost

Question 29

Social benefit

Answer 29

Private + external benefits

Question 30

Social costs

Answer 30

Private costs + external costs