FORMULA Flashcards
(3.1) Variable Costs :
output x variable cost per unit
(3.1) Total Costs :
variable costs + fixed costs
(3.1) Revenue :
quantity sold x selling price
(3.1) Unit costs :
total costs / number of units produced
(3.1) Profit :
total Revenue - total costs
OR
total contribution - total costs
(3.1) Market Capitalisation :
current share price x number of shares sold
(3.2) Expected Value :
probability x outcome
(and then add both options up together to get the EV).
(3.2) (Decision Tree) Net Gain :
expected value - cost of decision
(3.3) Sales Volume :
number of items sold
(3.3) Sales Value :
volume x selling price
(3.3) Market Growth :
(new market size - old market size) / old market size x 100
(if number is negative then it’s shrinking)
(3.3) Sales Growth :
(sales this year - sales last year) / sales last year x 100
(3.3) Market Share :
sales / total market size x 100
(3.3) Price Elasticity of Demand (PED) :
% change in quantity demanded / % change in price
(3.3) Income Elasticity of Demand (YED) :
% change in quantity demanded / % change in income
(3.4) Labour productivity :
output per period / employees per period
(3.4) Capacity :
maximum level of production
(3.4) Capacity Utilisation :
actual output / maximum output x 100
(3.5) Variance :
actual - budget
(3.5) Contribution Per Unit :
selling price per unit - variable cost per unit
(3.5) Total Contribution :
contribution per unit x units sold
(3.5) Break Even :
fixed costs / (selling price - variable costs) x 100
(3.5) Margin of Safety :
actual output - break even output
(3.5) Gross Profit :
sales revenue - cost of sales
(3.5) Gross Profit Margin :
gross profit / sales revenue x 100
(3.5) Operating Profit :
gross profit - expenses
(3.5) Operating Profit Margin :
operating profit / sales revenue x 100
(3.5) Profit for the Year :
operating profit - interest and taxation
(3.5) Profit for the Year Margin :
profit for the year / sales revenue x 100
(3.5) Return on Investment (ROI) :
operating profit / capital invested x 100
(3.5) Net Cash Flow :
total inflows - total outflows
(3.5) Closing Balance :
opening balance + net cash flow
(3.6) Employee costs as % of Turnover :
employee costs / sales revenue x 100
(3.6) Labour productivity :
output per period / number pf employees per period
(3.6) Labour Costs per Unit :
total about costs / total units of output
(3.6) Labour Turnover :
number of employees leaving over a given period / average number employed over a given period x 100
(3.6) Retention Rate :
number of employees with one or more years’ service / overall workforce number x 100
(3.6) Absenteeism :
number of staff absent / number of staff in total x 100
OR
number of absent days / number of available work days in a given period
(3.7) Current Assets :
(things business owns, +)
inventories + receivables + cash and other cash equivalents
(3.7) Working Capital OR Net Current Assets :
current assets - current liabilities
(3.7) Net Assets :
total assets - non current liabilities
OR
non current assets + working capital - non current liabilities
(should balance EQUITY)
(3.7) Assets Employed :
net current assets + non current assets
(3.7) Total Equity :
share capital + reserves
(3.7) Capital Employed :
total equity + non current liabilities
(3.7) Return on Capital Employed (ROCE) :
operating profit or profit before tax / (total equity + non current liabilities) x 100
(3.7) Current Ratio :
current assets / current liabilities
(3.7) Gearing :
non current liabilities / (total equity + non current liabilities) x 100
(3.7) Payables :
payables / cost of sales x 365
(3.7) Receivables :
receivables / revenue x 365
(3.7) Inventory Turnover :
cost of goods sold / average inventories held
(3.7) Payback :
1) Calculate NCF if not already (inflows-outflows).
2) Add up each years NCF until yo get the cost of initial investment (which is year 0).
3) If the cost of initial investment is between years, do this formula :
amount of investment not recovered / revenue generated in the near year x 365
Then add the days and how many years to get payback
(3.7) NPV :
1) Multiply the NCF by the discount factor for that year.
2) Pick the correct discount factor based on the % change, e.g, 10%.
3) Get NPV by adding them up together.
4) Minus this NPV from initial investment to calculate return.
(3.7) ARR :
1) Add up positive cash flows of each year (not Year 0).
2) Subtract the cost of initial investment e.g. 8m.
3) Divide by lifespan of investment.
4) Divide by cost of initial investment to find %.
5) E.g. NCF all added together is 11. So 11-8 (initial investment) = 3 / 5 (years) = 600,000 per year, 600,000 as a % of 8m is 600,000 / 8,000,000 x 100 = 7.5% = ARR.
anymore???
