formulaes

Question 1

market share

Answer 1

(sales of a product / total market sales) x100

Question 2

price elasticity of demand

Answer 2

% change in quantity demanded / % change in price

Question 3

income elasticity of demand

Answer 3

% change in quantity demanded /% change in income

Question 4

cost plus pricing

Answer 4

cost per product + % of cost ( mark up aka desired profit margin)

Question 5

sales volume

Answer 5

total number of units sold over a period of time

Question 6

sales revenue

Answer 6

number of units sold x unit price

Question 7

total variable costs

Answer 7

number of units sold x variable cost per unit

Question 8

total costs

Answer 8

fixed costs + variable costs

Question 9

gross profit

Answer 9

sales revenue - cost of sales

Question 10

operating profit

Answer 10

gross profit - overheads

Question 11

net profit

Answer 11

operating profit +/- finance costs

Question 12

opening balance

Answer 12

previous months closing balance

Question 12

margin of safety

Answer 12

actual / projected sales volume - break even sales home

Question 12

closing balance

Answer 12

opening balance + net cash flow

Question 12

net cash flow

Answer 12

total inflows - total outflows

Question 13

break even

Answer 13

fixed costs / contribution per unit

Question 13

contribution per unit

Answer 13

selling price per unit - variable cost per unit

Question 13

total contribution

Answer 13

contribution per unit x number of unit sold

Question 13

budget variance

Answer 13

actual- budget

Question 14

gross profit margin

Answer 14

(gross profit / sales revenue) x 100

Question 15

operating profit margin

Answer 15

operating profit / sales revenue x 100

Question 16

net profit margin

Answer 16

net profit / sales revenue x 100

Question 17

return on capital employed

Answer 17

operating profit : net profit / capital employed x100

Question 18

current ratio

Answer 18

current assets/ current liabilities

Question 19

acid test ratio

Answer 19

current assets - stock / current liabilities

Question 20

gearing ratio

Answer 20

long term liabilities / capital employed x100

Question 21

productivity

Answer 21

output per period / number of employees in that period

Question 22

capacity utilisation

Answer 22

(actual level of output / maximum possible output) x100

Question 23

simply payback

Answer 23

last negative cumulative cash flow figure / net cash flow following year it turns positive x12

Question 24

average rate of return

Answer 24

average net cash flow for life project / project costs x100

Question 25

net present value

Answer 25

each year net cash flow x discount factor - add the discounted net cash flows for each ear.

Question 26

expected value of each option

Answer 26

profitability x profit/loss in each eventuality
add outcomes together
subtract initial cost of option

Question 27

labour /staff turnover

Answer 27

number of employees that have left / average number of employees x100

Question 28

labour / staff retention rate

Answer 28

number of employee that haven’t left / average number of employees x100

Question 29

absenteeism

Answer 29

number of days taken by employees/ total possible workable days x100

Question 30

percentage growth

Answer 30

increase / original x100

Question 31

percentage change

Answer 31

difference / original x100

Question 32

capital employeed

Answer 32

total equity + non-current liabilities.