Casing Formulas

Question 1

Revenue

Answer 1

Quantity * Price

Question 2

Total Variable Cost

Answer 2

Quantity * Variable Costs

Question 3

Costs

Answer 3

VC + FC

Question 4

Profit

Answer 4

Revenue - Costs

Question 5

Profit

Answer 5

(Price - VC) * Quantity - FC

Question 6

Contribution Margin (how much money each product sold brings into the company after raw materials)

Answer 6

Price - Variable Cost

Question 7

Profit Margin (% of revenue that company keeps after all costs)

Answer 7

Profit/Revenue

Question 8

Return on Investment (ROI is how much add money company generates relative to size of initial investment)

Answer 8

Profit/ Investment Cost Example: Your company spent $5,000 on marketing to advertise its shirts. As a result, the company generated an additional $6,000 in profits from selling shirts. This profit does not yet take into account the costs of the marketing campaign. Therefore, the company has a net increase in profits of $1,000 from its original $5,000 investment. The ROI is $1,000 / $5,000 = 20%.

Question 9

Payback Period (how long to recoup money spent on an investment)

Answer 9

Investment Cost/ Profit per Year
Example: Your company invested in redesigning its shirts for $5,000. As a result, the company expects annual profits to increase by $1,000 for every year going forward. Therefore, the payback period for this investment is $5,000 / $1,000 = 5 years.

Question 10

Output

Answer 10

Rate of production * Time