Formua Theme 1-4

Question 1

Percentage change

Answer 1

New figure- old figure/ old figure x 100

Question 2

Market growth

Answer 2

Current size x 1 + (%growth/100)

Question 3

Market share

Answer 3

Firm’s sales/total industry sales x 100

Question 4

Price elasticity of demand (PED)

Answer 4

% change in quantity demanded / % change in price

Question 5

Income elasticity of demand (YED)

Answer 5

% change in quantity demanded / % change in income

Question 6

Total revenue

Answer 6

Sales price x quantity

Question 7

Total variable costs

Answer 7

Variable cost per unit x quantity

Question 8

Total costs

Answer 8

Total variable costs + total fixed costs

Question 9

Net cash flow

Answer 9

Inflows – outflows

Question 10

Opening balance

Answer 10

Closing balance from previous month

Question 11

Closing balance

Answer 11

Opening balance that month + net cash flow

Question 12

Contribution per unit

Answer 12

Sales price – variable cost per unit

Question 13

Break even output

Answer 13

Total fixed costs / contribution per unit

Question 14

Total contribution

Answer 14

Contribution per unit x quantity

Question 15

Margin of safety

Answer 15

Actual/forecast output – break even output

Question 16

Profit

Answer 16

Total revenue – total costs OR

Total contribution – total fixed costs OR

Margin of safety x contribution per unit

Question 17

Variance

Answer 17

Actual figures – budgeted figures

Question 18

Profit margin

Answer 18

Profit/Revenue x 100 = profit margin %

Question 19

Gross profit

Answer 19

Revenue – cost of sales

Question 20

Operating profit

Answer 20

Revenue – cost of sales and operating expenses

Question 21

Net profit/profit for year

Answer 21

Revenue – costs of sales, and operating expenses and net interest

Question 22

Current ratio

Answer 22

Current assets / current liabilities : 1

Question 23

Acid test ratio

Answer 23

Current assets – inventory / current liabilities : 1

Question 24

Productivity

Answer 24

Total output in time period / number of inputs

Question 25

Capacity utilisation

Answer 25

Actual output / maximum possible output x 100

Question 26

Gearing

Answer 26

Non-current liabilities / Capital employed x 100, expressed as a percentage

Question 27

Capital Employed

Answer 27

total equity + non current liabilities

Question 28

Return on Capital Employed (ROCE)

Answer 28

Operating profit / Capital employed x 100 expressed, as a %

Question 29

Payback

Answer 29

No. of full years + what you need/ what you get x 100

Question 30

Average profit

Answer 30

Total profit or returns/ no. of years

Question 31

Average rate of return

Answer 31

Average profit/ initial costs x 100

Question 32

Net present value

Answer 32

1) Multiply net cash flow x discount factor 2) Add up all the present values 3) Subtract initial outlay

Question 33

Expected value

Answer 33

Estimated financial effect x probability

Question 34

Net gain

Answer 34

Expected value of each outcome + deducing costs associated with decision

Question 35

Total profit over life time

Answer 35

Total net cash flow - investment outlay

Question 36

Critical Path Analysis

Answer 36

Float = LFT – duration - EST

Question 37

Decision Tree

Answer 37

Expected gain = (result1 x probability1) + (result2 x probability2) – initial cost of investment

Question 38

Labour turnover

Answer 38

Number of employees who leave in a time period / total number of employees in the business x 100 Express as a %.

Question 39

Absenteeism rate

Answer 39

Number of workers or worker days or hours lost to absence / Total number of workers or worker days or hours that could have been achieved x 100. Express as a percentage

Question 40

Cost per unit

Answer 40

Total costs / quantity produced

Question 41

Labour cost per unit

Answer 41

Total labour costs / quantity produced