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

= Labour costs ------------------------- 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 assets ---------------------------- 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

= cost of sales ----------------------------- average inventories held

Question 36

average rate of return (%)?

Answer 36

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