Equations

Question 1

Revenue (Sales or Turnover)

Answer 1

Selling price per unit × Number of units sold

Question 2

Variable costs (Total variable costs)

Answer 2

VarIable cost per unit × 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

Answer 5

Number of issued shares x current share price

Question 6

Expected value of a decision with two possible outcomes

Answer 6

A & B=
[Pay-off of A x probability of A] + Pay-off of B × probability of B

Question 7

Net gain =

Answer 7

Expected value - Initial cost of decision

Question 8

Market growth (%)

Answer 8

New -old
————————————- X100
Original size of the market

Question 9

Market share (%)

Answer 9

Business sales
——————————. X100
Total sales in market

Question 10

Added value

Answer 10

Sales revenue - costs 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
———————————— X100
Maximum possible output

Question 14

Return on investment (%) =

Answer 14

Profit from the investment (E)
——————————————- x 100
Cost of the investment (£)

Question 15

Gross Profit =

Answer 15

Revenue - Cost of Sales

Question 16

Profit from Operations

Answer 16

Operating profit =
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
——————- × 100
Sales revenue

Question 19

Operating profit margin (%) =

Answer 19

Operating profit
————————. × 100
Revenue

Question 20

Profit for year margin (%)

Answer 20

Profit for year
———————. × 100
Sales Revenue

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 × Units sold

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 - Break-even level of output

Question 26

Labour turnover (%) =

Answer 26

Number of staff leaving
—————————————- × 100
Number of staff emploved by the business

Question 27

Employee retention rate (%) for a particular time period =

Answer 27

Number of employees who remained with the business for the whole period of time
—————————————————×100
Number of employees at start of the time period

Question 28

Employee costs as percentage of turnover =

Answer 28

Employee costs
———————— × 100
Turnover

Question 29

Labour cost per unit =

Answer 29

Labour costs
———————
Units of output

Question 30

Return on capital employed (ROCE (%) =

Answer 30

Operating profit
————————————— × 100
Total equity + non-current liabilities

Where total equity + non-current liabilities = capital employed

Question 31

Payables days =

Answer 31

Payables
—————— × 365
Cost of sales

Question 32

Receivables days =

Answer 32

Receivables
—————— × 365
Revenue