Formulae and Key Data Flashcards
Total costs
Fixed costs + Variable costs
Profit
Total revenue - Total costs
Total contribution - Fixed costs
Total variable costs
Variable cost per unit x Number of units sold
Sales revenue/Turnover
Selling price per unit * Number of units sold
Market capitalisation of a business
Number of issued shares * Current share price
Net gain in a Decision Tree
Expected value - Initial cost of decision
Expected value of a decision
Pay-off of the decision * probability
Total expected value
All expected values of a decision path, such that the probability of those expected values all add up to one.
Market size volume
Quantity of goods produced in a particular market over a period of time, usually one year
Market size
The total sales revenue generated from selling all goods and services produced in a particular market over a period of time, usually one year.
Sales volume
Quantity of goods and services produced by a particular business over a period of time
Sales value
Total sales revenue over a period of time
Market growth (%) in year (X)
Change in the size of the market in year X/ Size of market in the year before X
Sales growth (%) in year (X)
Change in sales of products in year X/Sales of product in the year before X
Market share (%)
Sales of product/Total sales in the market
Price elasticity of demand
Percentage change in quantity demanded/ Percentage change in price
-1 <= PED <= 0 - Price inelastic
PED < -1 - Price elastic
Added value (value added)
Sales revenue - cost of bought-in goods
Labour productivity
Output per time period/ Number of employees
Unit cost (average costs)
Total costs of production/ number of units of output produced
Capacity utilisation (%)
Actual output in a given time period/ max potential output in a given time period *100
Return on investment (%)
Return on investment (£)/ Cost of investment (£) * 100
Gross profit
Sales Revenue - Cost of sales
Operating Profit
Gross Profit - Operating Costs
Profit for the Year
Operating Profit - Net costs - Tax
Variance
The difference between the actual figure and budgeted figure. This can apply to both costs aned profits
A favourable variance would result in higher profits than the budgeted figure.
An adverse variance would reflect that the profit is lower than the budget
Contribution per unit
Selling price - Variable costs per unit
Total contribution
Contribution per unit * Units produced or sold
OR
Revenue - Variable costs
Break-even output
Fixed costs / Contribution per unit
How do you find the break-even output on a chart?
It is the point in which Total Revenue equals Total Costs
How do you find the level of profit?
The level of profit at a given output is the vertical distance between the total revenue and total cost line
Margin of safety
Actual level of output - Breakeven level of output
Gross profit margin (%)
Gross profit / Sales revenue *100
Operating profit margin (%)
Operating profit/ Sales revenue * 100
Profit for the year margin (%)
Profit for the year/Sales revenue * 100
Labour turnover (%)
Number of staff leaving during the year / Average number of staff employed by the business
Employee retention rate (%) for a time period
Number of staff leaving during the year/ Average number of staff employed by the business during the year
Employee costs as a percentage of turnover
Employee costs/ Sales turnover * 100
Labour cost per unit
Labour costs/ Units of output
ROCE/ Return on Capital Employed
Operating profit * 100 / Total equity + non-current liabilities
OR
Operating profit/capital employed * 100
Capital employed
Total equity + non-current liabilities
Current ratio
Current assets / Current liabilities
Gearing (%)
Non-current liabilities 100 / Capital employed
OR
Non-current liabilities100/Total equity + non-current liabilities
Payables days
Payables*365/ Cost of sales
Payables = creditors
Receivable days
Receivables *365/ Sales revenue
Receivables = debtors
Inventory turnover
Cost of goods sold/ Average inventories held
Average rate of return
Net return over a period or time or from something specific/Cost of the project or cost over time.
