calculations- equations

Question 1

total costs?

Answer 1

=fixed costs + variable costs

Question 2

profit?

Answer 2

= total revenue - total costs
or…
total contribution - fixed costs

Question 3

total variable costs?

Answer 3

=variable cost per unit x number of units sold

Question 4

sales revenue or turnover?

Answer 4

= selling price per unit x number of units sold

Question 5

market capitalisation of a business?

Answer 5

= number of issued shares x current share price

Question 6

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

Answer 6

= (pay-off of A x profitability of A) + (pay-off of B x profitability of B)

N.B profitability of A + profitability of B =1.0

Question 7

in a decision tree net gain?

Answer 7

=expected value - initial cost of decision

Question 8

market growth (%)?

Answer 8

=change in the size of the market over a period
——————————- x100
original size of the market

Question 9

market share (%)?

Answer 9

= sales of one product or brand or business
————————— x100
total sales in the market

Question 10

added value?

Answer 10

= sales revenue - costs of brought-in goods and services

Question 11

labour productivity?

Answer 11

number of employees

Question 12

unit costs (average costs)?

Answer 12

= total costs
————————————–
number of units of output

Question 13

capacity utilisation (%) ?

Answer 13

= actual output
——————————- x100
maximum possible output

Question 14

return on investment (%)?

Answer 14

= profit from the investment (£)
——————————— x100
cost of the investment (£)

Question 15

gross profit?

Answer 15

= revenue - cost of sales

Question 16

profit from operations?

Answer 16

= operating profit= gross profit - operating expenses

Question 17

profit for year?

Answer 17

= operating profit + profit from other activities - net finance costs - tax

Question 18

gross profit margin (%)?

Answer 18

= gross profit
———————– x100
revenue

Question 19

operating profit margin (%)?

Answer 19

= operating profit
——————————— x100
revenue

Question 20

profit for the year margin (%)?

Answer 20

= profit for year
—————————– x100
revenue

Question 21

variance ?

Answer 21

= budgeted figure - actual figure

Question 22

contribution per unit?

Answer 22

= selling price - variable costs per unit

Question 23

total contribution ?

Answer 23

contribution per unit x units sold
or….
total revenue - total variable costs

Question 24

break-even output?

Answer 24

contribution per unit

Question 25

margin of safety?

Answer 25

= actual level of output - break-even level of output

Question 26

Labour turnover (%) ?

Answer 26

= number of staff leaving
——————————– x100
number of staff employees by the business

Question 27

employee retention rate (%) for a particular time period?

Answer 27

=
number of employees who remained with the business for the whole period of time
——————————— x100
number of employees at the start of the time period

Question 28

employee cots as percentage of turnover?

Answer 28

= employee costs
—————————— x100
turnover

Question 29

Labour costs per unit?

Answer 29

units of output

Question 30

return on capital employees (ROCE) [%]?

Answer 30

=
operating profit margin
———————————–x100
total equity + non-current liabilities

where total equity + non-current liabilities = capital employed

Question 31

current ratio?

Answer 31

current liabilities

Question 32

gearing (%)?

Answer 32

= non-current liabilities
——————————– x100
total equity + non-current liabilities

where total equity + non-current liabilities = capital employed

Question 33

payables days?

Answer 33

= payables
——————– x365
cost of sales

Question 34

receivables days?

Answer 34

= receivables
——————— x365
revenue

Question 35

inventory turnover?

Answer 35

average inventories held

Question 36

average rate of return (%)?

Answer 36

= average annual return (£)
——————————— x100
initial cost of project (£)