Formulas Flashcards
Revenue
(Sales or Turnover)
Selling price per unit
×
Number of units sold
Variable costs
(Total variable costs)
Variable cost per unit
×
Number of units sold
Total costs
Fixed costs
+
Variable costs
Profit
Total revenue − Total costs
OR
Total contribution − Fixed costs
Market capitalisation of a business
Number of issued shares
×
Current share price
Expected value of a decision with two possible outcomes eg. A & B
[Pay-off of A × probability of A]
+
[Pay-off of B × probability of B]
Expected value of a decision with two possible outcomes
eg. A & B
[Pay-off of A × probability of A]
+
[Pay-off of B × probability of B]
Net gain
Expected value
−
Initial cost of decision
Market growth (%)
[Change in the size of the market over a period
/
Original size of the market]
×
100
Market share (%)
[Sales of one product OR brand OR business
/
Total sales in the market]
×
100
Added value
Sales revenue
−
costs of bought-in goods and services
Labour productivity
Output over a time period
/
Number of employees
Unit costs
(Average costs)
Total costs
/
Number of units of output
Capacity utilisation (%)
[Actual output
/
Maximum possible output]
× 100
Return on investment (%)
[Profit from the investment (£)
/
Cost of the investment (£)]
× 100
Gross Profit
Revenue
−
Cost of Sales
Profit from Operations
(Operating profit)
Gross profit
−
Operating Expenses
Profit for year
Operating profit
+
Profit from other activities
−
Net finance costs
−
Tax
Gross profit margin (%)
Gross profit
/
Revenue × 100
Profit from operations margin
(Operating profit margin) (%)
[Operating profit
/
Revenue]
×
100
Profit for year margin (%)
[Profit for year
/
Revenue]
×
100
Variance
Budgeted figure
–
actual figure
Contribution per unit
Selling price
−
Variable costs per unit
Total contribution
Contribution per unit × Units sold
OR
Total revenue − Total variable costs
Break-even output
Fixed costs
/
Contribution per unit
Margin of safety
Actual level of output
−
Break-even level of output
Labour turnover (%)
[Number of staff leaving
/
Number of staff employed by the business]
×
100
Employee retention rate (%) for a particular time period
[Number of employees who remained with the business for the whole period of time
/
Number of employees at start of the time period ]
×
100
Employee costs as percentage of turnover
[Employee costs
/
Turnover ]
×
100
Labour cost per unit
Labour costs
/
Units of output
Return on capital employed (ROCE)(%)
Operating profit
/
[Total equity
+
non-current liabilities]
×
100
(Where total equity + non-current liabilities = capital employed)
Current ratio
Current assets
/
Current liabilities
Gearing (%)
Non-current liabilities
/
[Total equity
+
non-current liabilities]
×
100
(Where total equity + non-current liabilities = capital employed)
Payables days
[Payables
/
Cost of sales]
×
365
Receivables days
[Receivables
/
Revenue]
×
365
Inventory turnover
Cost of sales
/
Average inventories held
Average rate of return (%)
[Average annual return (£)
/
Initial cost of project (£)]
×
100
Income elasticity of demand
Percentage change in
quantity demanded
/
Percentage change
in income
