Equations Flashcards
Total costs
Fixed costs + Variable costs
Profit
Total revenue - Total costs
Sales revenue
Selling price per unit × Number of units sold
Market capitalisation of a business
Number of issued shares × Current share price
Expected value
Financial outcome X Probability + Results
Net gain (Decision tree)
Expected value - Initial cost of decision
Market growth (%)
Change in size of market between year(x-1) and year(x) / Size of market in year(x-1) X 100
Sales growth (%)
Change in sales of product or business between year(x-1) and year(x) / Sales of product or business in year(x-1) X 100
Market share (%)
Sales of one product, brand or business / Total sales in market X 100
PED
Percentage change in quantity demand / Percentage change in price
Added value
Sales revenue - Costs of goods and services
Labour productivity
Output per time period / Number of employees
Capacity utilisation (%)
Actual output in given time / Maximum possible output in given time X 100
ROI (%)
Return on investment / Cost of investment X 100
Gross profit
Sales revenue - Cost of sales
Operating profit
Sales revenue - Cost of sales - Operating expenses
Gross profit margin (%)
Gross profit / Sales revenue X 100
Operating profit margin (%)
Operating profit / Sales revenue X 100
Profit for the year
Operating profit + Profit from other activities - Net finance costs - Tax
Profit for the year margin (%)
Profit for the year / Sales revenue X 100
Contribution per unit
Selling price - Variable cost per unit
Total contribution
- Contribution per unit X Units produced or sold
- Total revenue - Total variable costs
Margin of safety
Actual level of output - Breakeven level of output
Profit for the year margin (%)
Profit for the year / Sales revenue X 100
Labour turnover (%)
Number of staff leaving during year / Average number of staff employed during year X 100
Employee retention rate (%)
Number of employees at end of period - Number of leavers / Number of employees at end of period X 100
Employee costs as percentage of turnover (%)
Employee costs / Sales turnover X 100
Labour cost per unit
Labour costs / Units of output
ROCE (%)
Operating profit / Total equity + Non current liabilities X 100
Current ratio
Current assets / Current liabilities
Gearing (%)
Non current liabilities / Total equity + Non current liabilities X 100
Payables days
Payables / Cost of sales X 365
Receivables days
Receivables / Sales revenue X 365
Inventory turnover
Cost of goods sold / Average inventories held
ARR (%)
Net return from project or number of years / initial cost of project X 100
Total variable costs
Variable cost per unit × Number of units sold
Market size volume
Quantity of goods and services produced in market over time period
Market size value
Total sales revenue generated from selling all of goods and services in a market over time period
Sales volume
Quantity of goods and services produced by business over time period
Sales value
Total sales revenue of business in time period
Unit costs
Total cost of production / Number of units of output produced
Variance
Difference between actual and budgeted figure.
Favourable variance - profits higher than forecast
Adverse variance - profits lower than forecast
Break-even
Fixed costs / Contribution per unit
Break-even point on chart
Total revenue = Total costs
Break-even chart profit point
Vertical distance between Total revenue and Total cost
