formulas’

Question 1

Revenue (sales of turnover)

Answer 1

Selling price per unit x number of units sold

Question 2

Variable costs (total variable costs)

Answer 2

Variables cost per unit x number of units sold

Question 3

Total costs

Answer 3

fixed costs + variable costs

Question 4

Profit

Answer 4

Total revenue - total costs OR
total contribution- fixed costs

Question 5

Market capitalization of a business

Answer 5

Number of issued shares x current share price

Question 6

Expected value of a business with two possible outcome e.g A & B

Answer 6

(pay off of A - 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 growth(%)

Answer 8

Changes in the size of marker over a period ÷ original size of the market x 100

Question 9

Market share (%)

Answer 9

Sales of one product OR brand OR business ÷ total sales in the market x 100

Question 10

Added value

Answer 10

Sales revenue - costs of brought-in goods and services

Question 11

Labour productivity

Answer 11

Output over a time period ÷ number of employees

Question 12

Unit costs (average costs)

Answer 12

Total costs ÷ number of units of output

Question 13

Capacity utilization ( % )

Answer 13

actual output ÷ maximum possible output x 100

Question 14

Return investment (%)

Answer 14

Profit from the investment(£) ÷ cost of the investment (£) x 100

Question 15

Gross profit

Answer 15

Revenue - cost of sales

Question 16

Profit of operations= operating profit

Answer 16

Gross profit- operating expenses

Question 17

Profit for year

Answer 17

Operating profit + Profit from other activities- Net finance costs - Tax

Question 18

Gross profit margin(%)

Answer 18

Gross profit ÷ revenue x 100

Question 19

operating profit margin ( % )