Formulas Flashcards
Total Cost=
Fixed costs + Variable costs
Profit=
Total revenue - Total costs
or
Total contribution - Fixed cots
Total variable costs=
Variable cost per unit X No’ of units sold
Sales revenue or turnover=
Selling price per unit X No’ of units sold
Market capitalisation=
No’ of issued shares X Current share price
In a decision tree, Net Gain=
Expected value - Initial cost of decision
Market size volume (definition)
the quantity of goods and services produced in a particular market over a period of time
Market size value (definition)
the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time
sales volume (definition)
the quantity of goods and services produced by a particular business over a period of time
sales value (definition)
the 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 sales / original sales X 100
Market share (%)
sales of one product OR brand OR business / total sales in the market X 100
PED
% change in quantity demanded / % change in price X 100
price inelastic ranges from..
-1 < inelastic < 0
price elastic ranges from..
-∞ < elastic < -1
added value=
sales revenue- costs of bought-in goods
labour productivity=
output per employee / No’ of employees
unit costs=
TC of production/ No’ of units produced
capacity utilisation (%)
actual output / maximum possible output X 100
ROI (%)
return on investment / cost of investment X 100
Gross profit=
sales revenue - cost of sales
Operating profit=
gross profit - operating expenses
profit for the year=
operating profit + profit from other activities - net finance costs - tax
variance (definition), favourable, adverse
the difference between an actual and a budget figure.
Favourable variance results in profits being higher than forecast.
Adverse variance results in profits being lower than forecast.
contribution per unit=
selling price - variable cost per unit
total contribution=
contribution per unit X units sold
OR
total revenue - total variable costs
Break-even output=
fixed costs / contribution per unit
break even output on chart is where,
total revenue = total costs
break even profit on chart is where,
vertical distance between total revenue line and total cost line
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 (%)
No’ of staff leaving / average No’ of staff employed X 100
employee retention (%)
No’ of staff leaving / average No’ of staff employed X 100
