Equations

Question 1

Revenue/sales/turnover

Answer 1

Selling price per unit x number of units sold

Question 2

Total variable cost

Answer 2

Variable cost per unit x number of units sold

Question 3

Profit

Answer 3

Total revenue - total costs

Question 4

Market capitalisation of a business

Answer 4

Number of issued shares x current share price

Question 5

Net gain

Answer 5

Expected value - initial cost of decision

Question 6

Market growth (%)

Answer 6

Change in the size of the market over a period ÷ original size of the market x 100

Question 7

Market share

Answer 7

Sales of one product/brand/business ÷ total sales in the market x 100

Question 8

Added value

Answer 8

Sales revenue - costs of bought-in goods/services

Question 9

Labour productivity

Answer 9

Output over a period of time ÷ number of employees

Question 10

Unit cost

Answer 10

Total costs ÷ number of units of output

Question 11

Capacity utilisation (%)

Answer 11

(Actual output ÷ max possible output) x 100

Question 12

Return on investment (%)

Answer 12

(Profit from the investment ÷ cost of the investment) x 100

Question 13

Labour turnover (%)

Answer 13

(Number of staff leaving ÷ number of staff employed by business) x 100

Question 14

Employee costs as a percentage of turnover

Answer 14

(Employee costs ÷ turnover) x 100

Question 15

Labour costs per unit

Answer 15

Labour costs ÷ units of output

Question 16

Gross profit

Answer 16

Revenue - cost of sales

Question 17

Operating profit

Answer 17

Gross profit - operating expenses

Question 18

Profit for the year

Answer 18

Operating profit + profit from other activities - net finance costs - tax

Question 19

Gross profit margin (%)

Answer 19

(Gross profit ÷ revenue) x 100

Question 20

Operating profit margin (%)

Answer 20

(operating profit ÷ revenue) x 100

Question 21

Profit for the year margin (%)

Answer 21

(Profit for the year ÷ revenue) x 100

Question 22

Variance

Answer 22

Budgeted figure - actual figure

Question 23

Contribution per unit

Answer 23

Selling price - variable costs per unit

Question 24

Total contribution (two equations)

Answer 24

Contribution per unit x units sold

Total revenue - total variable costs

Question 25

Break-even output

Answer 25

Fixed costs ÷ contribution per unit

Question 26

Margin of safety

Answer 26

Actual level of output - breakeven level of output

Question 27

Inventory turnover

Answer 27

Costs of sales ÷ average inventories held

Question 28

Average rate of return (%)

Answer 28

(Average annual return ÷ initial cost of project) x 100

Question 29

Current ratio

Answer 29

Current assets ÷ current liabilities

Question 30

Receivables days

Answer 30

(Receivables ÷ revenue) x 365

Question 31

Payable days

Answer 31

(Payables ÷ cost of sales) x 365

Question 32

Capital employed

Answer 32

Total equity + non-current liabilities