Equation meanings

Question 1

Market share

Answer 1

Market share is the percentage of total sales in a market that is owned by a particular business or product.

Question 2

Total Contribution

Answer 2

Total contribution is the difference in total sales and total variable costs.

Question 3

Price elasticity of demand

Answer 3

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.

Question 4

Breakeven

Answer 4

Breakeven is the point at which total revenue equals total costs.

Question 5

Income elasticity of demand

Answer 5

Income elasticity of demand measures the responsiveness of quantity demanded to a change in income.

Question 6

Contribution

Answer 6

Contribution is the percentage of total sales in a market that is owned by a particular business or product.

Question 6

Margin of safety

Answer 6

Margin of safety is the difference between actual sales and the break-even level of sales.

Question 7

Gross profit

Answer 7

Gross profit is the difference between sales revenue and the cost of goods sold.

Question 7

Sales volume

Answer 7

Sales volume refers to the number of units of a product sold within a specific period.

Question 8

Gross profit margin

Answer 8

Gross profit margin is a financial figure showing the percentage of sales revenue that exceeds the cost of goods sold.

Question 9

Total variable costs

Answer 9

Total variable costs are the aggregate of all costs that vary directly with levels of output.

Question 10

Sales revenue

Answer 10

Sales revenue is the total income generated from selling goods or services.

Question 11

Total costs

Answer 11

Total costs are the sum of all costs incurred in the production of goods or services.

Question 12

Variable costs

Answer 12

Variable costs are expenses that change in direct proportion to the level of output. Increase or decrease as the quantity of goods or services produced changes.

Question 13

Profit

Answer 13

Profit is the financial gain obtained when total revenue exceeds total costs.

Question 14

Net profit

Answer 14

Net profit is the amount remaining after all expenses, including operating costs, interest, and taxes have been deducted from total revenue.

Question 15

Current Ratio

Answer 15

The current ratio is a metric that measures a company’s ability to cover its short-term liabilities with its short-term assets. A ratio above 1 indicates the company has more assets than liabilities.

Question 16

Net profit margin

Answer 16

Net profit margin is a financial ratio that shows the percentage of revenue that remains as profit after all expenses, including taxes and interest have been deducted.
How efficient a company is turning revenue into profit.

Question 17

Operating profit

Answer 17

Operating profit is the profit a company makes from its core business operations.
Reflects the efficiency of the company’s core business activities in generating profit.

Question 18

Acid test ratio

Answer 18

The acid test ratio measures a company’s ability to cover short-term liabilities with its most liquid assets.
A ratio above 1 suggests the company can meet short-term obligations without relying on the sale of inventory.

Question 19

Productivity

Answer 19

How effectivly resources, such as labor or capital are utilised to generate goods or services.
Labour = human assets (employees)
Capital = financial and phuysical (machine) assets

Question 19

Operating profit margin

Answer 19

The operating profit margin is a ratio that indicates how efficiently a company is managing its core operations to generate profit.

Question 20

Working capital

Answer 20

Working capital is a measure of a company’s short-term financial health and operational efficiency.

Question 21

Labour productivity

Answer 21

Labour productivity measures the output per worker within a given time period.

Question 23

Net cash flow

Answer 23

Net cash flow shows the amount of net cash generated or lost by a business over a period of time.

Question 24

Variance

Answer 24

The difference between the expected and actual figure in financial terms.

Question 25

Capital productivity

Answer 25

Capital productivity measures the efficiency with which a business uses its capital to generate output.

Question 26

Capacity utilisation

Answer 26

Capacity utilisation measures the extent to which a business is using its production capacity.

Question 27

Capital

Answer 27

The financial assets or resources that a business uses to fund its operations and growth.