Equations Flashcards
Revenue/sales/turnover
Selling price per unit x number of units sold
Total variable cost
Variable cost per unit x number of units sold
Profit
Total revenue - total costs
Market capitalisation of a business
Number of issued shares x current share price
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/brand/business ÷ total sales in the market x 100
Added value
Sales revenue - costs of bought-in goods/services
Labour productivity
Output over a period of time ÷ number of employees
Unit cost
Total costs ÷ number of units of output
Capacity utilisation (%)
(Actual output ÷ max possible output) x 100
Return on investment (%)
(Profit from the investment ÷ cost of the investment) x 100
Labour turnover (%)
(Number of staff leaving ÷ number of staff employed by business) x 100
Employee costs as a percentage of turnover
(Employee costs ÷ turnover) x 100
Labour costs per unit
Labour costs ÷ units of output
Gross profit
Revenue - cost of sales
Operating profit
Gross profit - operating expenses
Profit for the 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 the year margin (%)
(Profit for the year ÷ revenue) x 100
Variance
Budgeted figure - actual figure
Contribution per unit
Selling price - variable costs per unit
Total contribution (two equations)
Contribution per unit x units sold
Total revenue - total variable costs
Break-even output
Fixed costs ÷ contribution per unit
Margin of safety
Actual level of output - breakeven level of output
Inventory turnover
Costs of sales ÷ average inventories held
Average rate of return (%)
(Average annual return ÷ initial cost of project) x 100
Current ratio
Current assets ÷ current liabilities
Receivables days
(Receivables ÷ revenue) x 365
Payable days
(Payables ÷ cost of sales) x 365
Capital employed
Total equity + non-current liabilities
