Finance- Formulae

Question 1

Revenue

Answer 1

Price per unit x number of units sold

Question 2

Variable costs

Answer 2

Variable cost per unit x number of units sold

Question 3

Total costs

Answer 3

Fixed cost + variable cost

Question 4

Profit

Answer 4

Total revenue - total costs

Total contribution - fixed cost

Question 5

Market capitalisation

Answer 5

Number of shares x current share price

Question 6

Net gain

Answer 6

Expected value - initial cost of decision

Question 7

Market growth (%)

Answer 7

Change in market size over a time period / original market size x100

Question 8

Market share(%)

Answer 8

Sales of one product OR brand OR business / total sales in market x100

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 employees

Question 11

Unit cost (average costs)

Answer 11

Total costs / number of units of output

Question 12

Capacity utilisation (%)

Answer 12

Actual output / maximum possible output x100

Question 13

Return on investment (%)

Answer 13

Profit from the investment (£) / cost of the investment (£) x100

Question 14

Gross profit

Answer 14

Revenue - cost of sales

Question 15

Operating profit

Answer 15

Gross profit - operating expenses

Question 16

Profit for the year

Answer 16

Operating profit + profit from other activities - net finance costs - tax

Question 17

Gross profit margin (%)

Answer 17

Gross profit / revenue x100

Question 18

Operating profit margin (%)

Answer 18

Operating profit / revenue x100

Question 19

Profit for the year margin (%)

Answer 19

Profit for the year / revenue x100

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 x unit sold

Total revenue - total variable costs

Question 23

Break even output

Answer 23

Fixed costs / contribution per unit

Question 24

Margin of safety

Answer 24

Actual level of output - break even level of output

Question 25

Labour turnover (%)

Answer 25

Number of staff leaving / number of staff employed by the business x100

Question 26

Employee retention rate (%) for a particular time period

Answer 26

Number of employees who have stayed with the business for the whole time period / number of employees at the start of the time period x100

Question 27

Employee costs as a percentage of turnover

Answer 27

Employee costs / turnover x100

Question 28

Labour costs per unit

Answer 28

Labour costs / units of output

Question 29

Return on capital employed (%)

Answer 29

Operating profit / total equity + non current liabilities x100

Question 30

Current ratio

Answer 30

Current assets / current liabilities

Question 31

Gearing (%)

Answer 31

Non current liabilities / total equity + non current liabilities x100

Question 32

Payable days

Answer 32

Payables / cost of sales x365

Question 33

Receivables days

Answer 33

Receivables/ revenue x365

Question 34

Inventory turnover

Answer 34

Cost of sales / average inventories held

Question 35

Average rate of return (%)

Answer 35

Average annual return(£) / initial cost of project (£) x100