formulas

Question 1

Total Costs

Answer 1

Fixed costs + Vairable costs

Question 2

Profit

Answer 2

Total revenue - Total costs

Question 3

Variable costs

Answer 3

Variable cost per unit X Units sold

Question 4

Sales revenue/ Turnover

Answer 4

Selling price per unit X no. of units sold

Question 5

Market Capitalisation

Answer 5

No. of issued shares X Current share price

Question 6

Expected value of a decision with two possible outcomes (A +B)

Answer 6

(Pay off of A X Probability of A)+(Pay off of B X Probability of B)

Question 7

Decision tree Net Gain

Answer 7

Expected value- Initial cost of decision

Question 8

Market size (volume)

Answer 8

The quantity of goods and services produced in a particular market over a period of time (one year)

Question 9

Market size (value)

Answer 9

The total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time (1year)

Question 10

Sales Volume

Answer 10

The quantity of goods and services produced by a particular business over a period of time.

Question 11

Sales Value

Answer 11

Total sales revenue of a particular business over a period of time.

Question 12

Market growth in a year (%)

Answer 12

Change in the size of the market between year (x-1) and year x / Size of the market in a year X100

Question 13

Sales growth (%) in year X

Answer 13

change in sales of product or business between year (x-1) and year x / Sales of product or bussiness in year (x-1) X100

Question 14

Market share (%)

Answer 14

sales of one product or brand or business / Total sales in the market

Question 15

Added value

Answer 15

Sales revenue- cost of goods and services bought in

Question 16

Labour productiviy

Answer 16

Output per time period / No of employees

Question 17

Unit costs (average costs)

Answer 17

Total costs of production / No. of units of output produced

Question 18

Capacity Utilisation (%)

Answer 18

Actual output in a given time period / Maximum possible output X100

Question 19

Return on investment (%)

Answer 19

Return on investment X Cost of investment X100

Question 20

Gross Profit

Answer 20

Sales Revenue - Cost of sales

Question 21

Operations Profit

Answer 21

Sales revenue - cost of sales- Operating Expenses

Question 22

Year Profit

Answer 22

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

Question 23

Variance

Answer 23

The difference between an actual and a budgeted figure. It can be favourable or adverse.

Question 24

Contribution per unit

Answer 24

Selling price- Variable costs per unit

Question 25

Total Contribution

Answer 25

Contribution x Units produced/ sold OR Total revenue- Total variable costs.

Question 26

Break even output

Answer 26

Fixed Costs / Contribution per unit

Question 27

Margin of Safety

Answer 27

Actual level of output - Breakeven level of output

Question 28

Gross profit margin (%)

Answer 28

Gross profit/ Sales revenue x100

Question 29

Profit from Operations Margin (%)

Answer 29

Operating Profit/ Sales revenue X100

Question 30

Profit for year margin

Answer 30

Profit for year/ Sales revenue

Question 31

Labour Turnover (%)

Answer 31

No. of staff leaving during the year/ Average no. of staff employed in that year

Question 32

Employee Retention (%)

Answer 32

No. of employees - No. of leavers / No. of employees at end of period

Question 33

Employee costs as a percentage of turnover

Answer 33

Employee costs/ Sales turnover X100

Question 34

Labour cost per unit

Answer 34

Labour costs/ Units of output

Question 35

ROCE (%)

Answer 35

Operating profit/ Capital employed

Question 36

Capital Employed

Answer 36

Total equity + Non current liabilities

Question 37

Current ratio

Answer 37

Current assets / Current liabilities

Question 38

Gearing (%)

Answer 38

Non current liabilities/ Capital employed

Question 39

Average rate of return (%)

Answer 39

Net return from project or no. of years/ Initial cost of project X100

Question 39

Receivables days

Answer 39

Receivables/ Sales revenue X365

Question 39

Playables days

Answer 39

Payables/ Cost of sales X365

Question 39

Inventory Turnover

Answer 39

Cost of goods sold/ Average inventories held