Formula

Question 1

Revenue/Sales/Turnover

Answer 1

Selling 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 costs + Variable costs

Question 4

Profit

Answer 4

Total revenue - Total Costs

OR

Total contribution - Fixed costs

Question 5

Market capitalisation of a business

Answer 5

Number of shares issued x Current share price

Question 6

Expected value of a decision with two possible outcomes

Answer 6

A & B =
(Pay-off of A × probability of A) + (Pay-off of B × probability of B)

Question 7

Net gain

Answer 7

Expected value - Initial cost of a decision

Question 8

Market growth (%)

Answer 8

Change in the size of the market over a period
———————————————– x100
Original size of the market

Question 9

Market share (%)

Answer 9

Sales of one product OR brand OR business
———————————————- x100
Total sales in the market

Question 10

Added value

Answer 10

Sales revenue - costs of bought-in goods and services

Question 11

Labour productivity

Answer 11

Output over a time period
/
Number of employees

Question 12

Unit costs (average costs)

Answer 12

Total costs
/
Number of units of output

Question 13

Capacity utilisation (%)

Answer 13

Actual output
———————————————– x100
Maximum possible output

Question 14

Return on investment (%)

Answer 14

Profit from the investment (£)
———————————————— x100
Cost of the investment (£)

Question 15

Gross profit

Answer 15

Revenue - Cost of sales

Question 16

Profit from operations/Operating profit

Answer 16

Gross profit - Operating expenses

Question 17

Profit for year

Answer 17

Operating profit + Profit from other activities - Net finance costs - Tax

Question 18

Gross profit margin (%)

Answer 18

Gross profit
——————– x100
Revenue

Question 19

Profit from operations margin/Operating profit margin (%)

Answer 19

Operating profit
————————— x100
Revenue

Question 20

Profit for year margin (%)

Answer 20

Profit for year
————————- x100
Revenue

Question 21

Variance

Answer 21

Budgeted figure - Actual figure

Question 22

Contribution per unit

Answer 22

Selling price - Variable costs per unit

Question 23

Total contribution

Answer 23

Contribution per unit x Units sold

OR

Total revenue - Total variable costs

Question 24

Break-even output

Answer 24

Fixed costs
/
Contribution per unit

Question 25

Margin of safety

Answer 25

Actual level of output - Break-even level of output

Question 26

Labour turnover (%)

Answer 26

Number of staff leaving
———————————————- x100
Number of staff employed by the business

Question 27

Employee retention rate (%) for a particular time period

Answer 27

Number of employees who remained with the business
for the whole period of time
———————————————— x100
Number of employees at start of the time period

Question 28

Employee costs as a percentage of turnover

Answer 28

Employee costs
———————– x100
Turnover

Question 29

Labour costs per unit

Answer 29

Labour costs
/
Units of output

Question 30

Return on capital employed (ROCE) (%)

Answer 30

Operating profit
——————————————– x100
Total equity + non-current liabilities

Where total equity + non-current liabilities = capital employed

Question 31

Current ratio

Answer 31

Current assets
————————- x100
Current liabilities

Question 32

Gearing (%)

Answer 32

Non-current liabilities
—————————————— x100
Total equity + non-current liabilities

Where total equity + non-current liabilities = capital employed

Question 33

Payables days

Answer 33

Payables
—————— x365
Cost of sales

Question 34

Receivables days

Answer 34

Receivables
—————– x365
Revenue

Question 35

Inventory turnover

Answer 35

Cost of sales
/
Average inventories held

Question 36

Average rate of return (%)

Answer 36

Average annual return (£)
————————————– x100
Initial cost of project (£)