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
selling price per unit X number of units sold
Market capitalisation
number of issued shares X share price
Expected value of a decision with two possible outcomes ( A and B)
(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
total sales revenue generated from selling all of the goods and services produced by a particular market over a period of time
sales volume
quantity of goods and services produced by a particular business over a period of time (usually one year)
sales value
total sales revenue of a particular business over a period of time
market growth (%)
change in market size/ original market size X 100
sales growth
change in product sales/ previous sales of product or business X 100
market share
sales of one product/brand/business % total market sales X 100
Price elasticity of demand
percentage change in quantity demanded % percentage change in price X 100
price inelastic demand coefficient range
less than 1
price elastic demand coefficient range
greater than 1
Added value
sales revenue - cost of bought in goods and services
Labour productivity
output per time period % number of employees
Unit costs
total costs of production % number of units of output produced
Capacity utilisation
actual output in a given time period % maximum possible output in a given time period X 100
Return on investment
return on investment (£) % cost of investment (£) X 100
Gross profit
Sales revenue - cost of sales
Profit from operations = operating profit
sales revenue - cost of sales - operating expenses
Profit for the year
operating profit + profit from other activities - net finance costs - tax
Variance
the difference between an actual and budgeted figure
Favourable variance
actual sales or products that 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 per unit
contribution per unit X units produced or sold
OR
total revenue - total variable costs
Break even output
fixed costs / contribution per unit
on a break even chart, what is the break even output?
level of output at which total revenue = total costs
on a break even chart, what is the level of profit at a given level of output?
vertical distance between the total revenue line and the total cost line
What is the 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/sales revenue X 100
labour turnover
number of staff leaving during the year
employee retention rate (%) for a particular time period
number of staff leaving during the year % average number of staff employed by the business during the year X 100
employee costs as a percentage of turnover
employee costs % sales turnover X 100
labour cost per unit
labour costs % units of output
ROCE %
operating profit / total equity + non current liabilities X 100
current ratio
current assets / current liabilities
gearing %
non current liabilities / total equity + non current liabilities X 100
payables days
payables / cost of sales X 365
recievable days
recievables / revenue X 100
inventory turnover
cost of goods sold / average inventories held
average rate of return %
net return from project or number of years / initial cost of project X 100
