equations

Question 1

Revenue (Sales or Turnover)

Answer 1

Selling price per unit X Number of units sold

Question 2

Variable costs ( Total variable costs )

Answer 2

Variable cost per unit X Number of units sold

Question 3

Total costs

Answer 3

Fixed costs + Variable costs

Question 4

Profit

Answer 4

Total Revenue - Total costs
OR
Total contribution - fixed costs

Question 5

Market capitalisation of a business

Answer 5

Number of issued shared X Current share price

Question 6

Expected value of a decision with two possible outcomes - Decision trees e.g A & B

Answer 6

(Pay off of A X Probability of A) + (Pay off of B X Probability of B)

Question 7

Net gain

Answer 7

Expected value - initial cost of decision

Question 8

Market growth (%)

Answer 8

Change in the size of the market over a period / original size of the market X 100

Question 9

Market share (%)

Answer 9

Sales of one product OR brand OR business / Total sales in the market X 100

Question 10

Added value

Answer 10

Sales revenue - cost of bought-in goods and services

Question 11

Labour productivity

Answer 11

Output over a time period / Number of employees

Question 12

Unit costs (average costs)

Answer 12

Total costs / Number of units of output

Question 13

Capacity utilisation %

Answer 13

Actual output / Maximum possible output

Question 14

Return on Investment

Answer 14

Profit of investment £ / Cost of investment £ X 100

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 for year

Answer 17

Operating profit + Profit from other activities - Net finance costs - Tax

Question 18

Gross profit Margin %

Answer 18

Gross profit / Revenue X 100

Question 19

Operating profit Margin %

Answer 19

Operating profit / Revenue X 100

Question 20

Profit for year margin %

Answer 20

Profit for year margin / Revenue X 100

Question 21

Variance

Answer 21

Budgeted figure - actual figure

Question 22

Contribution per unit

Answer 22

Selling price - variable costs per unit

Question 23

Total contribution

Answer 23

Contribution per unit X units sold
OR
Total revenue - total variable costs

Question 24

Break even output

Answer 24

Fixed costs / contribution per unit

Question 25

Margin of safety

Answer 25

Actual level of output - beak even level of output

Question 26

Labour turnover %

Answer 26

Number of staff leaving / number of staff employed by the business X 100

Question 27

Employee retention rate

Answer 27

Number of employees who remained with the business for the whole period of time / number of employees at start of the time period X 100

Question 28

Employee costs as % of turnover

Answer 28

Employee costs / Turnover X 100

Question 29

Labour cost per unit

Answer 29

Labour costs / Unit of output

Question 30

Return on Capital Employed - ROCE %

Answer 30

Operating profit / Total equity + non current liabilities X 100

Question 31

Capital Employed

Answer 31

Total equity + non current liabilities

Question 32

Current ratio

Answer 32

Current assets / current liabilities

Question 33

Gearing %

Answer 33

Non-current liabilities / Total equity + non current liabilities X 100

Question 34

Payable days

Answer 34

Payables / Cost of sales X 365

Question 35

Receivable days

Answer 35

Receivables / Revenue X 365

Question 36

Inventory Turnover

Answer 36

Cost of sales / Average inventory held

Question 37

ARR - Average rate of return

Answer 37

((Net profit - Initial Cost) / No. of years) / Initial Cost) X 100