Formulas

Question 1

total costs

Answer 1

fixed costs + variable costs

Question 2

profit

Answer 2

total revenue - total costs
or
total contribution - fixed costs

Question 3

total variable costs

Answer 3

variable cost per unit x number of units sold

Question 4

sales revenue or turnover

Answer 4

selling price per unit x number of units sold

Question 5

market capitalisation of a business

Answer 5

number of issued shares x current share price

Question 6

expected value

Answer 6

(pay-off of A x probability 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 size volume

Answer 8

quantity of goods and services produced in a particular market over a period of time usually one year

Question 9

market size (value)

Answer 9

the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time

Question 10

sales volume

Answer 10

is the quantity of goods and services produced by a particular business over a period of time

Question 11

sales value

Answer 11

is the total sales revenue of a particular business over a period of time

Question 12

market growth %

Answer 12

change in the size of the market / old or original size x 100

Question 13

sales growth % in year x

Answer 13

change in sales of product or business between year (x-1) and year x / sales of product or business in year (x-1)

Question 14

market share %

Answer 14

sales of one product or brand or business / total sales in the market x 100

Question 15

price elasticity of demand (PED)

Answer 15

percentage change in quantity demanded / percentage change in price x 100

Question 16

added value (value added)

Answer 16

sales revenue - costs of bought-in goods and services

Question 17

labour productivity

Answer 17

output per time period / number of employees

Question 18

unit costs (average costs)

Answer 18

total costs of production / number of units of output produced

Question 19

capacity utilisation %

Answer 19

actual output in a given time period / maximum possible output in given time period x 100

Question 20

return on investment %

Answer 20

return on investment £ / cost of the investment £ x 100`

Question 21

gross profit

Answer 21

sales revenue - cost of sales

Question 22

operating profit

Answer 22

sales revenue - cost of sales - operating expenses

Question 23

profit for the year

Answer 23

operating profit + profit from other activities - net finace costs - tax

Question 24

variance

Answer 24

the difference between an actual and a budgeted figure

Question 25

favourable variance

Answer 25

actual sales or profits are higher than budget, or costs are lower than budget

Question 26

adverse variance

Answer 26

actual sales or profits are lower than budget, or costs are higher than budget

Question 27

contribution per unit

Answer 27

selling price - variable costs per unit

Question 28

total contribution

Answer 28

contribution per unit x units produced or sold
OR
total revenue - total variable costs

Question 29

break-even output

Answer 29

fixed costs / contribution per unit

Question 30

margin of safety

Answer 30

actual level of output - breakeven level of output

Question 31

gross profit margin %

Answer 31

gross profit / sales revenue x 100

Question 32

operating profit margin %

Answer 32

operating profit / sales revenue x 100

Question 33

profit for the year margin %

Answer 33

profit for the year margin / sales revenue x 100

Question 34

labour turnover %

Answer 34

number of staff leaving during the year / avg number of staff employed by the business during the year x 100

Question 35

employee rentention rate %

Answer 35

number of staff who stay throughout the year / avg number of staff employed by the business during the year x 100

Question 36

employee costs as % of turnover

Answer 36

employee costs / sales revenue x 100

Question 37

labour cost per unit

Answer 37

labour costs / units of output x 100

Question 38

return on capital employeed (ROCE) %

Answer 38

operating profit / capital employed x 100

Question 39

current ratio

Answer 39

current assets / current liabilities

Question 40

gearing %

Answer 40

non-current liabilities / capital employed x 100

Question 41

payables (creditors) days

Answer 41

payables / cost of sales x 365

Question 42

receivables (debtors) days`

Answer 42

receivables / sales revenue x 365

Question 43

inventory turnover

Answer 43

cost of goods sold / avg inventories held

Question 44

avg rate of return %

Answer 44

net return from project £ / (number of years) / initial cost of project £ x 100

Question 45

capital employed

Answer 45

total equity + non-current liabilities