Calculations / Formulae Flashcards
How do you find contribution per unit?
Selling price - Variable costs
Price elasticity formula?
Change in demand / Change in price
Income elasticity formula?
Change in demand / Change in income
Revenue formula?
Selling price x units sold
Profit formula?
Total revenue - Total costs
OR
Total contribution - Fixed costs
Total costs formula?
Total variable costs + Fixed costs
What’s another name for fixed costs?
Overheads
Total contribution per unit formula?
Contribution per unit x units sold
OR
Total revenue minus Total variable costs
Market capitalisation
Current market share price x Number shares issued
Expected values (decision tree)
Expected value of a decision with two possible outcomes - A & B =
[Pay-off of A × probability of A] + [Pay-off of B × probability of B]
N.B. Probability of A + Probability of B = 1.0
Net gain
Expected value - Initial cost of decision
Sales value
Selling price x quantity sold (also known as Revenue or turnover)
Market size
Market size by volume is the quantity of goods and services produced in a particular market over a period of time usually one year. Market size value is the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time usually one year.
Market growth
Change in the size of the market/original size of the market x 100
Sales growth
change in sales/original amount sold
x 100
Market share
Sales of one product OR brand OR business/Total sales in the ×100 market
Labour productivity
Output per time period/Number of employees
Unit costs
Total costs of production/Number of units of output produced
Capacity utilisation
Actual output in a given time period/Maximum possible output in a x100 given time period
Lead time
Time between placing an order and the order arriving
Return on investment
Return on investment (£)/Cost
of the investment (£) ×100
Gross Profit
Sales Revenue - Cost of Sales
Operating profit
Sales Revenue - Cost of Sales - Operating Expenses
Profit for the year
Operating profit + Profit from other activities - Net finance costs -Tax
Net cash flow
cash inflow – cash outflow
Break-even output
Fixed costs/Contribution per unit
Margin of safety
Actual level of output - Breakeven level of output
Budget variance
The difference between an actual and a budgeted figure.
Favourable variance results in profits being higher than forecast.
Adverse variance results in profits being lower than forecast.
Gross profit margin, operating profit margin, profit for the year margin:
Take the appropriate profit figure, divide by sales revenue and multiply by 100
Labour turnover
Number of staff leaving during the year/Average number of staff employed by the business during the year x100
Labour productivity
Output per time period/Number of employees
Labour costs as a % of turnover
Labour costs/Sales turnover x 100
Labour cost per unit
Labour costs/Units of output
