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A2 CIE Business > Finance Formulas (A2) > Flashcards

Finance Formulas (A2) Flashcards

1
Q

Revenue

A

Price x Quantity

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2
Q

Cost of Sales

A

Opening inventory (Stock) + Purchases - Closing inventory

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3
Q

Gross Profit

A

Revenue - Cost of sales

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4
Q

Net Profit (Operating profit or Profit from operations)

A

Gross profit - expenses

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5
Q

Profit before Tax

A

Operating Profit - Interest (loans)

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6
Q

Profit for the year

A

Profit before tax - tax

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7
Q

Gross profit margin

A

Gross profit / sales revenue x 100

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8
Q

Operating profit margin

A

Operating profit / sales revenue x 100

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9
Q

ROCE (return on capital employed)

A

Net profit / capital employed x 100

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10
Q

Net book value

A

Asset worth - depreciation

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11
Q

CR (current ratio)

A

Current assets / current liabilities

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12
Q

AR (Acid ratio)

A

(current assets - stock) / current liabilities

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13
Q

Net realisable value

A

the amount inventory can be sold at - cost of selling it

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14
Q

Straight line Depreciation

A

[Historical Value (Original cost of asset) - expected residual value] / Expected useful life of asset (in years)

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15
Q

Inventory turnover ratio

A

Cost of gods sold / Average inventory

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16
Q

Day sales in trade receivables

A

(Trade accounts receivable / Credit sales) x 365

17
Q

Trade payables turnover (in days)

A

(Trade payables / Credit purchases) x 365

18
Q

Gearing ratio with non-current liabilities

A

( non-current liabilities / capital employed ) x 100

19
Q

Gearing ratio with Long term debt

A

( Long term debt / Shareholders equity ) x 100

20
Q

Gearing ratio with Total debt

A

( Total debt / total assets ) x 100

21
Q

Dividend Yield

A

(Dividend per share / current market share price ) x 100

22
Q

Dividend per share

A

Total annual dividends / Total number of issued shares

23
Q

Dividend cover

A

Profits for the year / Annual dividends

24
Q

Price earnings ratio

A

Current market share price / earnings per share

25
Q

Earning per share

A

Profit for the year / number of issued shares

26
Q

Payback

A

( Additional net cash inflow needed / Annual cash flow in the year ) x 12

27
Q

ARR ( Average rate of return)

A

( Annual profit [net cash flow] / Average investment [initial capital cost] ) x 100

28
Q

Average investment

A

( Initial capital cost - residual capital value ) / 2

29
Q

Price elasticity of demand

A

Percentage change in quantity of demand / percentage change in price

30
Q

Percentage change in quantity of demand

A

( Change in quantity / Original quantity ) x 100

31
Q

Percentage change in price

A

( Change in price / Original price ) x 100

32
Q

Income elasticity of demand

A

Change in demand for a product / Change in consumer incomes

33
Q

Promotional elasticity of demand

A

Change in demand of the product / Change in promotional spending

A2 CIE Business (9 decks)

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