Formulae

Question 1

Revenue

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 issued shares x Current share price

Question 6

Expected value of a decision

Answer 6

(Pay-off of A x Probibillity of A) + (Pay-off of B x Probability of B)

Question 7

Net gain

Answer 7

Expected value - Initial cost of decision

Question 8

Market growth (%)

Answer 8

(change in size of market over a period ÷ original size of market) x100

Question 9

Market share (%)

Answer 9

(Sales of product ÷ Total sales in market) x100

Question 10

Added value

Answer 10

Sales revenue - costs of brought in goods and services

Question 11

Labour productivity

Answer 11

Output over time period ÷ Number of employees

Question 12

Unit costs

Answer 12

Total costs ÷ Number of units of output

Question 13

Capacity utilisation (%)

Answer 13

(Actual output ÷ Maximum possible output) x100

Question 14

Return on investment (%)

Answer 14

(Profit from investment ÷ Cost of the investment) x100

Question 15

Gross profit

Answer 15

Revenue - Cost of sales

Question 16

Operating profit

Answer 16

Gross profit - Operating expenses

Question 17

Profit for the year

Answer 17

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

Question 18

Gross profit margin (%)

Answer 18

(Gross profit ÷ Revenue) x100

Question 19

Profit of the year margin (%)

Answer 19

(Profit for the year ÷ Revenue) x100

Question 20

Variance

Answer 20

Budgeted figure - Actual figure

Question 21

Contribution per unit

Answer 21

Selling price - Variable costs per unit

Question 22

Total contribution

Answer 22

Contribution per unit x Units sold
or
Total revenue - Total variable costs

Question 23

Break-even output

Answer 23

Fixed costs ÷ contribution per unit

Question 24

Margin of safety

Answer 24

Actual level of output - Break-even level of output

Question 25

Labour turnover (%)

Answer 25

(Number of staff leaving ÷ Number of staff employed by the business) **x**100

Question 26

Employee retention rate (%)

Answer 26

(Number of employees who remained in the business ÷ Number of employees at start of time period) **x**100

Question 27

Employee costs as a percentage of turnover

Answer 27

(Employee costs ÷ Turnover) **x**100

Question 28

Labour cost per unit

Answer 28

Labour costs ÷ Units of output

Question 29

Return on captial employed(%)

Answer 29

(Operating profit ÷Total equity + Non-current liabillities) **x**100

Question 30

Current ratio

Answer 30

Current assets ÷ Current liabillities

Question 31

Gearing (%)

Answer 31

Non-current liabillities ÷ (Total equity + Non-current liabilities) **x**100

Question 32

Payables days

Answer 32

(Payables ÷ Revenue) **x**365

Question 33

Receivable days

Answer 33

(Receievables ÷ Revenue) **x**365

Question 34

Inventory turnover

Answer 34

Cost of sales ÷ Average inventories held

Question 35

Average rate of return (%)

Answer 35

(Average annual return ÷ Initial cost of project) **x**100