Formulas Flashcards
All the formulas needed in Business A-Level
Formula for Revenue (sales or turnover)
Selling price per unit x Number of units sold
Formula for Variable costs (total variable costs)
Variable cost per unit x Number of units sold
Formula for Total costs
Fixed costs + Variable costs
Formula for Profit
Total revenue - Total costs
OR
Total contribution - Fixed costs
Formula for Market capitalisation of a business
Number of issued shares x Current share price
Formula for Expected value of a decision with two possible outcomes
A & B =
[Pay-off of A x Probability of A] + [Pay-off of B x Probability of B]
Formula for Net gain
Expected value - Initial cost of decision
Formula for Market Growth (%)
[Change in the size of the market over a period ÷ Original size of the market] x 100
Formula for Market Share (%)
[Sales of one product OR brand OR business ÷ Total sales in the market] x 100
Formula for Added Value
Sales revenue - Costs of brought-in goods and services
Formula for Labour productivity
Output over a time period ÷ Number of employees
Formula for Unit costs (average costs)
Total costs ÷ Number of units of output
Formula for Capacity utilisation (%)
[Actual output ÷ Maximum possible output] x 100
Formula for Return on investment (ROI) (%)
[Profit from the investment (£) ÷ Cost of the investment (£)] x 100
Formula for Gross profit
Revenue - Cost of sales
Formula for Profit from operations
Operating profit =
Gross profit - Operating expenses
Formula for Profit for the Year
[Operating profit + Profit from other activities] - [Net finance costs + Tax]
Formula for Gross profit margin (%)
[Gross profit ÷ Revenue] x 100
Formula for Profit from operations margin (%)
Operating profit margin =
[Operating profit ÷ Revenue] x 100
Formula for Profit for the year margin (%)
[Profit for year ÷ Revenue] x 100
Formula for Variance
Budgeted figure - actual figure
Formula for Contribution per unit
Selling price - Variable costs per unit
Formula for Total contribution
Contribution per unit x Units sold
OR
Total revenue - Total variable costs
Formula for Break-Even output
Fixed costs ÷ Contribution per unit
Formula for Margin of safety
Actual level of output - Break-even level of output
Formula for Labour turnover (%)
[Number of staff leaving ÷ Number of staff employed by the business] x 100
Formula for Employee costs as a percentage of turnover
[Employee costs ÷ Turnover] x 100
Formula for Labour cost per unit
Labour costs ÷ Units of output
Formula for Return on capital employed (ROCE) (%)
[Operating profit ÷ [Total equity + non-current liabilities]] x 100
*where total equity + non-current liabilities = capital employed
Formula for current ratio
Current assets ÷ Current liabilities
Formula for Gearing (%)
[Non-current liabilities ÷ [Total equity + non-current liabilities]] x 100
*where total equity + non-current liabilities = capital employed
Formula for Payables days
[Payables ÷ Cost of sales] x 365
Formula for Receivables days
[Receivables ÷ Revenue] x 365
Formula for Inventory turnover
Cost of sales ÷ Average inventories held
Formula for Average rate of return (%)
[Average annual return (£) ÷ Initial cost of project (£)] x 100
Formula for price elasticity of demand (PED)
% change in quantity demanded ÷ % change in price
Formula for income elasticity of demand (YED)
% change in quantity demanded ÷ % change in income
Formula for re-order level
Lead time x average daily usage + buffer stock level
