Formulas

Question 1

Calculate net profit margin

Answer 1

(net profit / revenue) x 100

Question 2

Calculate return on capital employed

Answer 2

(net profit / capital employed) x 100

Question 3

Calculate gross profit margin

Answer 3

(gross profit / revenue) x 100

Question 4

Calculate current ratio

Answer 4

current assets / current liabilities

Question 5

Calculate net current assets

Answer 5

current assets - current liabilities

Question 6

Calculate net profit

Answer 6

gross profit - other expenses (sometimes + other income streams)

Question 7

Calculate sales revenue

Answer 7

quantity sold x price

Question 8

Calculate trade payable days

Answer 8

(trade payables / credit purchases) x 365

Question 9

Calculate trade receivable days

Answer 9

(trade receivables / credit sales) x 365

Question 10

Calculate average inventory

Answer 10

(opening inventory + closing inventory) / 2

Question 11

Calculate depreciation using the straight line method

Answer 11

original price - (depreciation amount x number of years)

Question 12

Calculate depreciation using the reducing balance method

Answer 12

current value x depreciation rate (% per year) x number of years

Question 13

Calculate price elasticity of demand

Answer 13

% change in quantity demanded / % change in price

Question 14

Calculate variable costs

Answer 14

variable cost per unit x number of units sold

Question 15

Calculate total costs

Answer 15

fixed costs + variable costs

Question 16

Calculate income elasticity of demand

Answer 16

% change in quantity demanded / % change in income

Question 17

Calculate net cash flow

Answer 17

cash inflow - cash outflow

Question 18

Calculate break even output

Answer 18

fixed costs / contribution per unit

Question 19

Calculate margin of safety

Answer 19

actual output - break even output

Question 20

Calculate budget variance

Answer 20

budget amount - actual amount

Question 21

Calculate capital employed

Answer 21

opening capital + net profit - drawings

Question 22

Calculate labour productivity

Answer 22

output / number of employees

Question 23

Calculate labour turnover (% of employees leaving)

Answer 23

(number of employees leaving / total number of employees) x 100

Question 24

Calculate break even point

Answer 24

fixed costs / contribution per unit

Question 25

Calculate market share %

Answer 25

(sales of the business / total sales in market) x 100

Question 26

Calculate market capitalisation

Answer 26

number of issued shares x current share price

Question 27

Calculate return on capital employed

Answer 27

(return on investment / cost of investment) x 100

Question 28

Calculate profit for year margin in %

Answer 28

(profit for year / sales revenue) x 100

Question 29

Define mark-up ratio

Answer 29

The ratio of gross profit to sales price

Question 30

Define inventory turnover

Answer 30

The rate that inventory stock is sold or used after coming into possession of the company

Question 31

1) Define liquid capital

2) Define liquid capital ratio

Answer 31

1) Assets that can be converted into cash with little impact on overall value

2) How much of your capital is liquid?

Question 32

Calculate contribution per unit

Answer 32

selling price - variable costs

Question 33

Calculate gross profit

Answer 33

sales revenue - cost of goods sold

Question 34

Calculate inventory turnover ratio (in days)

Answer 34

(average inventory / cost of goods sold) x 365

Question 35

Calculate liquid capital ratio

Answer 35

(current assets - current inventory) / current liabilities

Question 36

Calculate cost of goods sold

Answer 36

opening inventory + purchases - closing inventory

Question 37

Calculate mark-up ratio

Answer 37

(gross profit / cost of sales) x 100

Question 38

If you’re asked to calculate something’s “margin”, what is the process?

Answer 38

( ______ / revenue) x 100