equations

Question 1

market capitalisation

Answer 1

number of ordinary issues shares x current price of 1 share

Question 2

ordinary share capital

Answer 2

number of ordinary issued shares x original price of 1 share

Question 3

expected value

Answer 3

probability x result

Question 4

net gain

Answer 4

expected values - initial cost

Question 5

total contribution

Answer 5

total sales revenue - total variable costs

Question 6

contribution per unit

Answer 6

selling price per unit - variable cost per unit

Question 7

break even

Answer 7

fixed costs ÷ contribution per unit

Question 8

margin of safety

Answer 8

actual output - break even output

Question 9

profit

Answer 9

margin of safety x contribution per unit

Question 10

gross profit

Answer 10

total revenue - total cost of sales

Question 11

gross profit margin

Answer 11

(gross profit ÷ revenue) x100

Question 12

operating profit

Answer 12

sales revenue - cost of sales and operations

Question 13

operating profit margin

Answer 13

(operating profit ÷ sales revenue) x100

Question 14

net profit

Answer 14

total revenue - total costs

Question 15

net profit margin

Answer 15

(net profit ÷ total revenue) x100

Question 16

payable days

Answer 16

(payables ÷ cost of sales) x365

Question 17

receivable days

Answer 17

(receivables ÷ revenue) x365

Question 18

return on investment

Answer 18

(investment profit ÷ capital invested) x100

Question 19

current ratio

Answer 19

current assets ÷ current liabilities

(1.5 to 2.5)

Question 20

gearing ratio

Answer 20

(non current liabilities ÷ capital employed) x100

(25% to 50%)

Question 21

capital employed

Answer 21

total equity + non current liabilities

Question 22

market size

Answer 22

(total sales ÷ market share) x100

Question 23

market growth

Answer 23

(change in market size ÷ original market size) x100

Question 24

market share

Answer 24

(firm sales ÷ total market sales) x100

Question 25

PED

Answer 25

(% change demand ÷ % change price)

Question 26

IED

Answer 26

(% change demand ÷ % change income)

Question 27

return on capital employed

Answer 27

(operating profit ÷ capital employed) x100

Question 28

inventory turnover

Answer 28

cost of goods sold ÷ average inventory held

Question 29

labour productivity

Answer 29

total output ÷ total number of workers

Question 30

labour turnover

Answer 30

(employees leaving ÷ total number of employees) x100

Question 31

retention rate

Answer 31

(staff remaining ÷ original staff) x100

Question 32

employee cost as a percentage of turnover

Answer 32

(employee cost ÷ revenue) x100

Question 33

labour cost per unit

Answer 33

labour cost ÷ total output units

Question 34

unit costs

Answer 34

total production cost ÷ total output units

Question 35

capacity utilisation

Answer 35

(actual output ÷ maximum possible output) x100

Question 36

revenue

Answer 36

selling price per unit x number of units sold

Question 37

total cost

Answer 37

variable cost + fixed cost

Question 38

total variable cost

Answer 38

variable cost per unit x number of units sold

Question 39

ARR

Answer 39