Equations

Question 1

Revenue?

Answer 1

SP/Number of units sold

Question 2

VC?

Answer 2

VC per unit/ Number of units sold

Question 3

TC?

Answer 3

FC + VC

Question 4

Profit?

Answer 4

Total revenue − Total costs OR

Total contribution − Fixed costs

Question 5

Market capitalisation of a business?

Answer 5

Number of issued shares × Current share price

Question 6

Net Gain?

Answer 6

Expected value − Initial cost of decision

Question 7

Market Growth?

Answer 7

Change in the size of the market over a period/Original size of the market × 100

Question 8

Market Share?

Answer 8

Sales of one product/Total sales in the market × 100

Question 9

Added Value?

Answer 9

Sales revenue − costs of bought-in goods and services

Question 10

Labour productivity?

Answer 10

Output over a time period/Number of employee

Question 11

Unit Costs (AC)?

Answer 11

Total costs/Number of units of output

Question 12

Capacity Utilisation?

Answer 12

Actual output/Maximum possible output × 100

Question 13

Return On Investment?

Answer 13

Profit from the investment /Cost of the investment × 100

Question 14

Gross Profit?

Answer 14

Revenue − Cost of Sales

Question 15

Operating Profit?

Answer 15

Gross profit − Operating Expenses

Question 16

Net Profit?

Answer 16

TR/TC

Question 17

Gross Profit Margin?

Answer 17

Gross Profit/Revenue x 100

Question 18

Operating Profit Margin?

Answer 18

Operating Profit/Revenue x 100

Question 19

Net Profit Margin?

Answer 19

Net Profit/Revenue x 100

Question 20

Variance?

Answer 20

Budgeted figure – actual figure

Question 21

Contribution? (Per Unit)

Answer 21

Selling price − Variable costs per unit

Question 22

Total Contribution?

Answer 22

Contribution per unit × Units sold

Total revenue − Total variable costs

Question 23

Break Even?

Answer 23

Fixed costs/Contribution per unit

Question 24

Labour Turnover?

Answer 24

Number of staff leaving/Number of staff employed by the business × 100

Question 25

Employee Retention?

Answer 25

Number of employees who remained with the business

for the whole period of time/Number of employees at start of the time period ×100

Question 26

Labour Costs?

Answer 26

Labour costs/Units of output

Question 27

ROCE?

Answer 27

Operating profit/Total equity + non-current liabilities × 100
Where total equity + non-current liabilities = capital employed

Question 28

Current Ratio?

Answer 28

Current assets/Current liabilities

Question 29

Gearing?

Answer 29

Non-current liabilities/Total equity + non-current liabilities ×100
Where total equity + non-current liabilities = capital employed

Question 30

Payables?

Answer 30

Payables/Revenue x365

Question 31

Receivables?

Answer 31

Receivables/Revenue x365

Question 32

Inventory Turnover?

Answer 32

Cost of sales/Average inventories held

Question 33

Average Rate Of Return?

Answer 33

Add all NCF/The amount of years = AAR

AAR /Initial cost of project × 100

Question 34

Net Present Value?

Answer 34

Cash flow/Discount factor

Question 35

Payback?

Answer 35

Initial Investment/ Cash Inflows