Finance Equations Flashcards
Revenue
Price of product multiplied by quantity sold
Profit
Revenue - total costs
Unit costs
Variable cost per unit x number of units
Total costs
Fixed costs + total variable costs
Total variable cost
Total costs divided by output
Total cash inflow
Add together cash inflows
Total cash outflow
Add together cash outflows
Net cash flow
Cash inflows - cash outflows
Opening balance
Closing balance of previous month
Closing balance
Opening balance + net cash flow
ARR(average rate of return)
Step one:calculate average yearly profit
Total profits divided by number of years
Step two:
Average yearly profit divided by cost of investment project
Margin of safety
Actual output - break even output
Gross profit
Revenue - cost of sales
Net profit
Gross profit - expenses
Operating profit
Operating profit - tax and interest
Gross profit margin
Gross profit divided by revenue x100
Net profit margin
Net profit divided by revenue x100
Net current assets
Current assets minus current liabilities
Net assets
(Fixed assests + current assets) - (current liabilities - long term liabilities)
