Equations

Question 1

What is the equation for Gross Profit?

Answer 1

Gross Profit = sales - the cost of sales

Question 2

What is the equation for Gross Profit Margin?

Answer 2

Gross Profit Margin = (Gross Profit÷Sales Revenue) × 100

Question 3

What is the equation for Net Profit?

Answer 3

Net Profit = gross profit - the expenses of operating the business

Question 4

What is the equation for Net Profit Margin?

Answer 4

Net Profit Margin =
(Net Profit ÷ Sales Revenue) × 100

Question 5

What is the equation for Percentage Change?

Answer 5

((New price - Original price) ÷ Original price) × 100

Question 6

What is the equation for Average Rate of Return?

Answer 6

(Average Annual Profit ÷ Cost of Investment) × 100

Question 7

What is the equation for Profit?

Answer 7

Profit = Revenue - Costs

Question 8

What is the equation for Revenue?

Answer 8

Revenue = Price × Quantity

Question 9

What is the equation for Total Costs?

Answer 9

Total Costs = Fixed costs + Variable costs

Question 10

What is the equation for Total Variable Costs?

Answer 10

TVB = Variable Cost per Unit × Output

Question 11

What is the equation for Average Unit Cost?

Answer 11

Total Costs ÷ Output

Question 12

What is the equation for Market Share?

Answer 12

(Business Sales ÷ Market Sales) × 100

Question 13

What is the equation for Market Growth?

Answer 13

(Change in Sales ÷ Original Sales) × 100

Question 14

What is the equation for Break-Even Output?

Answer 14

Intersection between Total Revenue and Total Costs

Question 15

What is the equation for Margin of Safety?

Answer 15

Actual Sales - Break-Even Output

Question 16

What is the equation for Net Cash Flow?

Answer 16

Cash inflows - Cash Outflows
(If it’s in brackets it’s negative)

Question 17

What is the equation for Closing Balance?

Answer 17

Opening Balance + Net Cash Flow