Formulae and Calculations Flashcards
Total costs
= Fixed costs + Variable costs
Profit
= Total revenue - total costs
or
Profit = total revenue - Total contribution - fixed costs
Total variable costs
Total variable costs = (Variable cost per unit) x (Number of units sold)
Sales revenue or Turnover
= (Selling price per unit) x (number of units sold)
Market capitalisation of a business
= (Number of issued shares) x (Current share price)
Expected value of a decision with two possible outcomes (A&B) - Decision trees
= [(Pay off A) x (Probability of A)] + [(Pay off B) x (Probability of B)]
In a decision tree Net gain
= Expected value - Initial cost of decision
Market size volume
Is the quantity of goods and services produced in a particular market over a period of time (Usually one year)
Market size (Value)
Is the total sales revenue generated from selling all the goods and services produced in a particular market over a period of time (Usually one year)
Sales volume
Is the quantity of goods and services produced in a particular business over a period of time (Usually one year)
Sales Value
= The total sales revenue of a particular business over a period of time (Usually one year)
Market share (%)
= [(Sales of one product OR brand Or Business) / (Total sales in the market)] x 100
Price Elasticity of Demand (PED)
[(%△QD) / (%△Price)] x 100
Added value
= (Sales revenue)- (cost of bought in goods and services)
Labour productivity
= (Total cost of production) / (Number of units of output produced)
Unit costs
= (Total costs of production) / (Number of units of output produced)
Capacity utilisation (%)
= [ (Actual output in a given time period) / (Maximum output in a given period) ] x 100
Return on investment (%)
= [ (Return on investment £) / (Cost of the investment) ] x 100
Gross profit
= Sales revenue - cost of sales
Operating profit
= Sales revenue - Cost of sales - Operating expenses
Profit for year
= Operating profit + Profit from other activities - Net finance costs - Tax
Variance
= The difference between an actual and a budgeted figure
Favourable: Sales/revenue higher than budgeted, or costs are lower than budgeted
Adverse:Sales/revenue are lower than budgeted, or costs are higher than budgeted.
Contribution per unit
= Selling price - variable costs per unit
Total contribution
= Contribution per unit x units sold
OR
= Total revenue - Total variable costs
Break even output
= (Fixed costs) / (Contribution per unit)
Margin of safety
= Actual level of output - Breakeven level of output
Gross Profit margin (%)
= [ (Gross Profit) / Sales Revenue) ] x 100
Operating profit margin (%)
= [ (Profit for the year) / (Sales revenue) ] x 100
Profit for the year margin (%)
= [ (Profit for the year) / (Sales revenue) ] x 100
Labour turnover (%)
= [ (Number of staff leaving during the year) / (Average number of staff employed by the business durning the year) ] x 100
Employee retention rate (%)
= [ (Number of staff who stay though-out the year) / (Average number of staff employed by the business during the year) ] x 100
Employee costs as percentage of turnover
= [ (Employee costs) / (Sales revenue) ] x 100
Labour cost per unit
= [ (Labour costs) / (Units of output) ]
Return on capital employed (ROCE) (%)
= [ (Operating profit) / (Total equity + Non-current liabilities) ] x 100
Capital Employed
= Total equity + Non-current liabilities
Current ratio
= [ (Current assets) / (Current liabilities) ]
Gearing (%)
= [ (Non-current liabilities) / (Total Equity + non-current liabilities) ]
Payables (Creditors) Days
= [ (Payables) / (Cost of sales) ] x 365
Receivables (Debtors) Days
= [ (Receivables) / (Sales revenue) ] x 365
Inventory turnover
= [ (Cost of goods sold) / (Average inventories held) ] x 100
Average rate of return (%)
= [ (Net return from project (£) / number of years) / (Initial cost of project (£)) ] x 100
