Comp 2 Formulas

Question 1

Price elasticity of demand

Answer 1

% change in quantity demand
——————————————
% change in price

Question 2

Percentage change

Answer 2

Change
———— x 100
Original

Question 3

Elastic and inelastic scale

Answer 3

(-5) ——- (-1) ——————————- (0)

Elastic Inelastic

Question 4

Elasticity of demand triangle

Answer 4

% change in demand

PED % change in price

Question 5

Income elasticity of demand (YED)

Answer 5

% change in quantity demanded
———————————————
% change in income

Question 6

Income elasticity of demand scale

Answer 6

(-3) —————- (0) —— (1) ———————-(+3)

Negative figure — above 0 —————- greater
less than 1 than
1

Inferior good Income Income
inelastic Elastic
(Necessities) (Luxury)

Question 7

Income elasticity of demand triangle

Answer 7

% change in demand

Income elasticity % change of income
of demand

Question 8

Depreciation

Answer 8

Original cost of the fixed asset - residual value
——————————————————————
Useful life of the asset

Question 9

Gross profit margin (%)

Answer 9

(Gross profit / sales revenue) x 100

Question 10

Net profit margin (%)

Answer 10

(Net profit / sales revenue) x 100

Question 11

ROCE (return on capital employed) (%)

Answer 11

(Net profit / capital employed) x 100

Capital employed = long term liabilities +
Shareholders capital

Question 12

Current ratio

Answer 12

Current assets
———————
Current liabilities

(Answer :1)

Question 13

Acid test ratio

Answer 13

Current assets - stock
——————————
Current liabilities

(Answer:1)

Question 14

Gearing (%)

Answer 14

(Long term liabilities / capital employed) x 100

Capital employed = long term liabilities +
Shareholders capital