equations Flashcards
Revenue (Sales or Turnover)
Selling price per unit X Number of units sold
Variable costs ( Total variable costs )
Variable cost per unit X Number of units sold
Total costs
Fixed costs + Variable costs
Profit
Total Revenue - Total costs
OR
Total contribution - fixed costs
Market capitalisation of a business
Number of issued shared X Current share price
Expected value of a decision with two possible outcomes - Decision trees e.g A & B
(Pay off of A X Probability of A) + (Pay off of B X Probability of B)
Net gain
Expected value - initial cost of decision
Market growth (%)
Change in the size of the market over a period / original size of the market X 100
Market share (%)
Sales of one product OR brand OR business / Total sales in the market X 100
Added value
Sales revenue - cost of bought-in goods and services
Labour productivity
Output over a time period / Number of employees
Unit costs (average costs)
Total costs / Number of units of output
Capacity utilisation %
Actual output / Maximum possible output
Return on Investment
Profit of investment £ / Cost of investment £ X 100
Gross profit
Revenue - Cost of sales
Profit from Operations - Operating profit
Gross profit - Operating Expenses
Profit for year
Operating profit + Profit from other activities - Net finance costs - Tax
Gross profit Margin %
Gross profit / Revenue X 100
Operating profit Margin %
Operating profit / Revenue X 100
Profit for year margin %
Profit for year margin / Revenue X 100
Variance
Budgeted figure - actual figure
Contribution per unit
Selling price - variable costs per unit
Total contribution
Contribution per unit X units sold
OR
Total revenue - total variable costs
Break even output
Fixed costs / contribution per unit
Margin of safety
Actual level of output - beak even level of output
Labour turnover %
Number of staff leaving / number of staff employed by the business X 100
Employee retention rate
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
Employee costs as % of turnover
Employee costs / Turnover X 100
Labour cost per unit
Labour costs / Unit of output
Return on Capital Employed - ROCE %
Operating profit / Total equity + non current liabilities X 100
Capital Employed
Total equity + non current liabilities
Current ratio
Current assets / current liabilities
Gearing %
Non-current liabilities / Total equity + non current liabilities X 100
Payable days
Payables / Cost of sales X 365
Receivable days
Receivables / Revenue X 365
Inventory Turnover
Cost of sales / Average inventory held
ARR - Average rate of return
((Net profit - Initial Cost) / No. of years) / Initial Cost) X 100
