Formulae

Question 1

Revenue formulae

Answer 1

Selling price per unit X number of units sold

Question 2

Variable cost per unit X number of units sold

Answer 2

Variable costs

Question 3

Total costs

Answer 3

Fixed costs + variable costs

Question 4

Profit

Answer 4

Total revenue - total costs

Question 5

Market capitalisation of a business

Answer 5

Number of issue shared x current share price

Question 6

A & B = (pay off of A x probability of a) + (pay off of b x probability of b)

Answer 6

Expected value of a decision with two possible outcomes

Question 7

Expected value - initial cost of decision

Answer 7

Net gain

Question 8

Change in the size of the market over a period / original size of the market = x 100

Answer 8

Market growth

Question 9

Market share

Answer 9

Sales of one product or brand or business / total sales in the market = x 100

Question 10

Added value

Answer 10

Sales revenue - costs of bought in goods and services

Question 11

Output over a period of time / number of employees

Answer 11

Labour productivity

Question 12

Unit costs (average costs)

Answer 12

Total costs / number of units of output

Question 13

Capacity utilisation

Answer 13

Actual output / maximum possible output = x 100

Question 14

Return on investment

Answer 14

Profit from the investment / cost of the investment = x 100

Question 15

Gross profit

Answer 15

Revenue - costs of sales

Question 16

Profit from operations

Answer 16

Operating profit = gross profit - operating expenses

Question 17

Profit of the year

Answer 17

Operating profit + profit from other activities - net finance costs - tax

Question 18

Gross profit / revenue = x 100

Answer 18

Gross profit margin

Question 19

Profit from operations margin

Answer 19

Operating profit / revenue = x 100

Question 20

Profit for year margin

Answer 20

Profit for year / revenue = x 100

Question 21

Variance

Answer 21

Budgeted figure - actual figure

Question 22

Contribution per unit

Answer 22

Selling price - variable costs per unit

Question 23

Contribution per unit x units sold

Answer 23

Total contribution

Question 24

Break even output

Answer 24

Fixed costs / contribution per unit

Question 25

Actual level of output - break even level of output

Answer 25

Margin of safety

Question 26

Labour turnover

Answer 26

Number of staff leaving / number of staff employed by the business = x 100

Question 27

Employee retention rate

Answer 27

Number of employees who remained the whole time / number of employees at start

Question 28

Employee costs as % of turnover

Answer 28

Employee costs / turnover = x 100

Question 29

Labour cost per unit

Answer 29

Labour costs / units of output

Question 30

Operating profit / total equity + non current liabilities

Answer 30

return on capital employed

Question 31

Current ratio

Answer 31

Current assets / current liabilities

Question 32

Non current liabilities/ total equity + non current liabilities = x 100

Answer 32

Gearing

Question 33

Payables days

Answer 33

Payables / costs of sales = x 365

Question 34

Receivable days

Answer 34

Receivables / revenue = x 365

Question 35

Inventory turnover

Answer 35

Cost of sales / average inventories held

Question 36

Average annual return / initial cost of project = x 100

Answer 36

Average rate of return