Formulas Flashcards
total costs
fixed costs + variable costs
profit
total revenue - total costs
or
total contribution - fixed 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
(pay-off of A x probability of A) + (pay-off of B x probability of B)
net gain
expected value - initial cost of decision
market size volume
quantity of goods and services produced in a particular market over a period of time usually one year
market size (value)
the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time
sales volume
is the quantity of goods and services produced by a particular business over a period of time
sales value
is the total sales revenue of a particular business over a period of time
market growth %
change in the size of the market / old or original size x 100
sales growth % in year x
change in sales of product or business between year (x-1) and year x / sales of product or business in year (x-1)
market share %
sales of one product or brand or business / total sales in the market x 100
price elasticity of demand (PED)
percentage change in quantity demanded / percentage change in price x 100
added value (value added)
sales revenue - costs of bought-in goods and services
labour productivity
output per time period / number of employees
unit costs (average costs)
total costs of production / number of units of output produced
capacity utilisation %
actual output in a given time period / maximum possible output in given time 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 the year
operating profit + profit from other activities - net finace costs - tax
variance
the difference between an actual and a budgeted figure
favourable variance
actual sales or profits are higher than budget, or costs are lower than budget
adverse variance
actual sales or profits are lower than budget, or costs are higher than budget
contribution per unit
selling price - variable costs per unit
total contribution
contribution per unit x units produced or 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 %
operating profit / sales revenue x 100
profit for the year margin %
profit for the year margin / sales revenue x 100
labour turnover %
number of staff leaving during the year / avg number of staff employed by the business during the year x 100
employee rentention rate %
number of staff who stay throughout the year / avg number of staff employed by the business during the year x 100
employee costs as % of turnover
employee costs / sales revenue x 100
labour cost per unit
labour costs / units of output x 100
return on capital employeed (ROCE) %
operating profit / capital employed x 100
current ratio
current assets / current liabilities
gearing %
non-current liabilities / capital employed x 100
payables (creditors) days
payables / cost of sales x 365
receivables (debtors) days`
receivables / sales revenue x 365
inventory turnover
cost of goods sold / avg inventories held
avg rate of return %
net return from project £ / (number of years) / initial cost of project £ x 100
capital employed
total equity + non-current liabilities
