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
