Formulas Flashcards
Revenue (Sales or Turnover) =
Selling price per unit x Number of units sold
Total variable costs =
Variable cost per unit x Number of units sold
Total costs =
Total fixed costs + Total variable costs
Profit =
Total revenue - Total costs
OR
Toal contribution - Fixed costs
Market cap of a business =
Number of issued shares x Current share price
Expected value of a decision with two possible outcomes eg. A & B =
[—- —- of A x —————- of A] + [—- —- of B x —————- of 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 growth (%) =
(Change in the size of the market over a period of time / Original size of the market) x 100
Market share (%)
(Sales of one product OR brand OR business / Total sales in the market) x 100
Added value =
Sales revenue – costs of bought-in goods and services
Labour productivity =
Output over a time period / Number of employees
Unit costs (average costs) =
Total costs / Number of units of output
Capacity utilisation (%) =
(Actual output / Maximum possible output) x 100
Return on investment (%) =
(Profit from the investment (£) / Cost of the investment (£)) x 100
Gross profit =
Revenue - Cost of Sales
Profit from Operations / Operating profit =
Gross profit – Operating Expenses
Profit for the year =
Operating profit - Profit from other activities - Net finance costs - Tax
Gross profit margin (%) =
(Gross profit / Revenue) x 100
Operating profit margin (%) =
(Operating profit / Revenue) x 100
Profit for the year margin (%) =
(Profit for the year / Revenue) x 100
Variance =
Budgeted figure – Actual figure
Contribution per unit =
Selling price – Variable costs per unit
Total contribution =
Contribution per unit x Units sold
OR
Total revenue – Total variable costs
Break-even output =
Fixed costs / Contribution per unit
OR
Fixed costs / (Selling price - VC per unit)
Margin of safety =
Actual level of output – Break-even level of output
Labour turnover (%) =
(Number of staff leaving / Number of staff employed by the business) x 100
Employee retention rate (%) for a time period =
(No. of employees that who remained with the business for the whole time period / No. of employees at start of time period) x 100
Labour cost per unit =
Labour costs / Units of output
Return on capital employed (ROCE) (%) =
(Operating profit / Capital employed) x 100
OR
(Operating profit / (Total equity + Non-current liabilities)) x 100
Return on capital employed (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
OR
(Non-current liabilities / Capital employed) x 100
Payables days =
(Payables / Cost of sales) x 365
Receivables days =
(Receivables / Revenue) x 365
Inventory turnover =
(Cost of sales / Avg. inventories held)
Average rate of return (%) =
(Avg. annual return (£) / Initial cost of project (£)) x 100
Acid test ratio / Quick ratio =
(Current assets – Inventory) / Current Liabilities
Total equity =
Total assets - Total liabilities
