Component 1 Flashcards
What is the formula for calculating market share?
Sales of one business or product / Total sales in the market × 100
How is revenue calculated?
Price × quantity sold
What is the formula for total costs?
Fixed costs + variable costs
What is the formula for unit costs?
Total costs / units of output
How is profit calculated?
Revenue - total costs
What is the formula for gross profit?
Revenue - cost of sales
How is net profit calculated?
Gross profit - expenses
What is the formula for gross profit margin?
Gross profit / Revenue × 100
What is the formula for calculating net profit margin?
Net profit margin = (Net profit / Revenue) × 100
Net profit margin indicates how much profit a company makes for every euro of revenue.
How is total contribution calculated?
Total contribution = Revenue - total variable costs
Total contribution reflects the amount available to cover fixed costs and generate profit.
What is the formula for contribution per unit?
Contribution per unit = Selling price per unit - variable cost per unit
This metric shows the profit generated from each unit sold after covering variable costs.
How do you calculate break-even units?
Break-even units = Fixed costs / Contribution per unit
The break-even point indicates the number of units that must be sold to cover all costs.
What does margin of safety represent?
Margin of safety = Actual sales - breakeven
This metric shows how much sales can drop before a business reaches its break-even point.
What is budget variance?
Budget variance = Budget amount - actual amount
This indicates the difference between budgeted and actual financial performance.
How is net cash flow calculated?
Net cash flow = Total cash in - total cash out
This figure reflects the total cash generated or used during a specific period.
What is the formula for calculating the closing balance?
Closing balance = Opening balance + net cash flow
The closing balance shows the amount of cash available at the end of a period.
What does labour productivity measure?
Labour productivity = Units of output / Number of employees
This metric assesses the efficiency of labour in generating output.
How is labour turnover expressed?
Labour turnover = (Number of staff leaving / Average number of staff) × 100
This percentage indicates the rate at which employees leave a business.
What is added value?
Selling price - cost of raw materials
What is capital productivity?
Units of output / Cost of machinery or amount invested
What is capacity utilisation?
Actual output / Maximum possible capacity × 100
What is the re-order level?
(Average daily usage x lead time) + minimum stock level
What is the lead time?
(re-order level - minimum stock) / daily usage
What is the re-order quantity?
max stock level - min stock level
