equations

Question 1

revenue(sales or turnover) =

Answer 1

selling price per unit x number of units sold

Question 2

variable cost (total Variable cost)

Answer 2

variable price per unit x number of units sold

Question 3

total costs

Answer 3

fixed costs + variable cost

Question 4

profit

Answer 4

revenue - total costs / total contributions - fixed cost

Question 5

market capitalisation of a business =

Answer 5

number of issued shares x current share price

Question 6

market share = (%)

Answer 6

sales of one product OR brand OR business
———————————————— x 100
total sales in the market

Question 7

Expected value of a decision with two outcomes

Answer 7

eg, A & B = (payoff of A x probability of A) + (payoff of B x Probability of B)

Question 8

net gain =

Answer 8

Expected value - Initial cost of decisions

Question 9

market growth (%) =

Answer 9

change in the size of the market over a period of time
———————————————— x 100
original size of the market

Question 10

added value =

Answer 10

sales revenue - the cost of bought-in goods and services

Question 11

labour productivity

Answer 11

Number of employees

Question 12

unit cost (average cost) =

Answer 12

number of units of output

Question 13

capacity utilisation (%) =

Answer 13

actual output
———————————— x100
maximum possible output

Question 14

return on investment (%) =

Answer 14

profit from the investment (£)
——————————————— x100
cost of the investment (£)

Question 15

gross profit =

Answer 15

revenue - cost of sales

Question 16

profit from operations/ operating profit =

Answer 16

gross profit - operating expenses

Question 17

profit of the year

Answer 17

operating profit + profit from other activities - net financial costs - tax

Question 18

gross profit margins (%) =

Answer 18

gross profit
—————– x 100
revenue

Question 19

profit from operation margins (%) =

Answer 19

operating profit
—————– x 100
revenue

Question 20

profit from the year margins (%) =

Answer 20

profit for the year
—————– x 100
revenue

Question 21

variance =

Answer 21

budgeted figure - the actual figure

Question 22

contribution per unit =

Answer 22

selling price - variable cost per unit

Question 23

total contribution =

Answer 23

contribution per unit x units sold OR total revenue - total variable cost

Question 24

break-even output =

Answer 24

contribution per unit

Question 25

margin of safety =

Answer 25

actual output - break-even level of output

Question 26

labour turnover =

Answer 26

number of staff leaving
———————————- x 100
staff employed by the business

Question 27

employee retention rate period of time

Answer 27

number of staff still with business
————————————————- x100
staff at the start of period of time

Question 28

emplo costs as % of turnover

Answer 28

employee cost
——————— x100
turnover

Question 29

labour costs p unit

Answer 29

units of output

Question 30

ROCE

Answer 30

operating prof
————– x100
total equity = non current liabilities

Question 31

unit cost

Answer 31

num of units output

Question 32

capacity utilisation

Answer 32

actual output
——————- x 100
maximium pos output

Question 33

return on investment

Answer 33

profit from investment
———————— x100
cost of investment

Question 34

current ratio =

Answer 34

current liability

Question 35

gearing (%)

Answer 35

non-current liability
————- x100
total equity + non-current liability

Question 36

payable days

Answer 36

payables
————- x365
cost of sales

Question 37

receivable days

Answer 37

receivables
———— x365
revenue

Question 38

inventory turnover

Answer 38

average inventory held

Question 39

ARR (%)

Answer 39

average annual return (£)
—————————– x100
initial cost of project (£)