Formua Theme 1-4 Flashcards
Percentage change
New figure- old figure/ old figure x 100
Market growth
Current size x 1 + (%growth/100)
Market share
Firm’s sales/total industry sales x 100
Price elasticity of demand (PED)
% change in quantity demanded / % change in price
Income elasticity of demand (YED)
% change in quantity demanded / % change in income
Total revenue
Sales price x quantity
Total variable costs
Variable cost per unit x quantity
Total costs
Total variable costs + total fixed costs
Net cash flow
Inflows – outflows
Opening balance
Closing balance from previous month
Closing balance
Opening balance that month + net cash flow
Contribution per unit
Sales price – variable cost per unit
Break even output
Total fixed costs / contribution per unit
Total contribution
Contribution per unit x quantity
Margin of safety
Actual/forecast output – break even output
Profit
Total revenue – total costs OR
Total contribution – total fixed costs OR
Margin of safety x contribution per unit
Variance
Actual figures – budgeted figures
Profit margin
Profit/Revenue x 100 = profit margin %
Gross profit
Revenue – cost of sales
Operating profit
Revenue – cost of sales and operating expenses
Net profit/profit for year
Revenue – costs of sales, and operating expenses and net interest
Current ratio
Current assets / current liabilities : 1
Acid test ratio
Current assets – inventory / current liabilities : 1
Productivity
Total output in time period / number of inputs
Capacity utilisation
Actual output / maximum possible output x 100
Gearing
Non-current liabilities / Capital employed x 100, expressed as a percentage
Capital Employed
total equity + non current liabilities
Return on Capital Employed (ROCE)
Operating profit / Capital employed x 100 expressed, as a %
Payback
No. of full years + what you need/ what you get x 100
Average profit
Total profit or returns/ no. of years
Average rate of return
Average profit/ initial costs x 100
Net present value
1) Multiply net cash flow x discount factor
2) Add up all the present values
3) Subtract initial outlay
Expected value
Estimated financial effect x probability
Net gain
Expected value of each outcome + deducing costs associated with decision
Total profit over life time
Total net cash flow - investment outlay
Critical Path Analysis
Float = LFT – duration - EST
Decision Tree
Expected gain = (result1 x probability1) + (result2 x probability2) – initial cost of investment
Labour turnover
Number of employees who leave in a time period / total number of employees in the business x 100
Express as a %.
Absenteeism rate
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
Cost per unit
Total costs / quantity produced
Labour cost per unit
Total labour costs / quantity produced
