formulae

Question 1

revenue

Answer 1

selling price x no. units sold

Question 2

variable costs

Answer 2

variable cost per unit x no. units sold

Question 3

total costs

Answer 3

fixed costs + variable costs

Question 4

profit

Answer 4

revenue - total costs
OR
total contribution - fixed costs

Question 5

market capitalisation of a business

Answer 5

no. issued shares x current share price

Question 6

expected value of decision with two possible outcomes

Answer 6

(pay off of A x probability of A)+(pay off for 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) x 100

Question 9

market share

Answer 9

(sales of one product to brand or business / total sales in the market|) x 100

Question 10

added value

Answer 10

sales revenue - costs of brought in goods and services

Question 11

labour productivity

Answer 11

output over a time period / no. of employees

Question 12

unit costs

Answer 12

total costs / no. units output

Question 13

capacity utilisation

Answer 13

actual output / maximum possible output

Question 14

return on investment

Answer 14

(profit from investment/ cost of investment) x 100

Question 15

gross profit

Answer 15

revenue - cost of sales

Question 16

profit from operation

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) x 100

Question 19

operating profit margin

Answer 19

(operating profit/ revenue) x 100

Question 20

profit for the 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

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 - breakeven output

Question 26

labour turnover

Answer 26

(no. staff leaving / no. staff employed by business) x 100

Question 27

employee retention rate

Answer 27

(no. employees who remained with business for whole period of time / no employees at start of the time period) x 100

Question 28

employee costs as a percentage of turnover

Answer 28

(employee costs/ turnover) x 100

Question 29

labour costs per unit

Answer 29

labour costs / units of output

Question 30

return on capital employed

Answer 30

(operating profit/total equity + non-current liabilities) x 100

Question 31

current ratio

Answer 31

current assets / current liabilities

Question 32

gearing

Answer 32

(non-current liabilities / total equity + non- current liabilities) x 100

Question 33

payable days

Answer 33

(payables / cost 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 rate of return

Answer 36

(average annual return / initial cost of project) x 100