Equations for TB1

Question 1

Return on capital employed

Answer 1

Operating profit / Capital employed (NCL + E) x 100%

Question 2

Capital turnover

Answer 2

Revenue / Capital employed

Question 3

Gross profit margin

Answer 3

Gross profit / Revenue x100%

Question 4

Operating profit margin

Answer 4

Operating profit / revenue x 100%

Question 5

Current ratio

Answer 5

Current assets / Current liabilities

Question 6

Acid test ratio

Answer 6

Current assets - Inventory / Current liabilities

Question 7

Gearing ratio

Answer 7

Debt / Equity x 100%

Question 8

Interest cover ratio

Answer 8

Operating profit / Interest payable

Question 9

Contribution per unit

Answer 9

Selling price - variable cost

Question 10

Breakeven point in units

Answer 10

Fixed cost / Contribution per unit

Question 11

Level of activity to earn a required profit

Answer 11

Required profit + fixed costs / Contribution per unit

Question 12

Margin of safety

Answer 12

Total sales - break even sales

Question 13

C/S ratio

Answer 13

Contribution / Sales

Question 14

Breakeven point in sales revenue

Answer 14

Fixed costs / C/S ratio

Question 15

Sales revenue to earn a required profit

Answer 15

Required profit + Fixed costs / C/S ratio

Question 16

Efficiency variance

Answer 16

(Actual quantity of inputs - Standard quantity of inputs for actual output) x standard unit price

Question 17

Price variance

Answer 17

(Actual unit price - Standard unit price) x Actual quantity of inputs