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Business Studies Formulas > Formulas > Flashcards

Formulas Flashcards

1
Q

Total costs

A

Fixed costs + variable costs

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2
Q

Profit

A

Total revenue - total costs

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3
Q

Variable costs

A

Variable cost per unit X units sold

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4
Q

Revenue

A

Selling price X units sold

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5
Q

Market capitalisation

A

Number of issued shares X current share price

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6
Q

Expected value of a decision w two possible outcomes

A

(Probability 1 X outcome 1) + (probability 2 X outcome 2)

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7
Q

In a decision tree NET GAIN

A

Expected value - initial cost of investment

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8
Q

Market size

A

Volume

Quantity of goods and services produced in a particular market over a period of time

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9
Q

Market size value)

A

Total sales revenue generated from selling all the good and services produced in a particular market Over a period of time

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10
Q

Sales volume

A

Quantity of goods and services produced by a particular business over a period of time (usually a year)

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11
Q

Sales value

A

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

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12
Q

Market growth (%)

A

Change in size of market between year (x-1) and year x / size of market in year (x-1) X 100

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13
Q

Sales growth %

A

Change in sales of product or business between year (x-1) and year x / sales of product or business in year (x-1)

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14
Q

Market share (%)

A

Sales of one product OR brand OR business / total sales in the market X 100

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15
Q

Price elasticity if demand

A

% change in quantity demanded / % change price

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16
Q

Income elasticity of demand

A

% change in quantity demanded / % change in consumer income

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17
Q

Calculating percentage change

A

Find out percentage difference between two numbers then divide by original then X by 100

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18
Q

Added value (value added)

A

Sales revenue - costs of bought in good and services

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19
Q

Labour productivity

A

Total output / number of employees

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20
Q

Unit costs

A

Total cost of production / number of units of output produced

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21
Q

Capacity utilisation %

A

Actual output / maximum possible output X 100

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22
Q

Return on investment %

A

Return on investment (£) / cost of investment (£) X 100

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23
Q

Gross profit

A

Sales revenue - cost of sales (direct costs - materials and shop floor labour)

24
Q

Operating profit

A

Sales revenue - cost of sales - operating expenses (e.g. rent)

25
Q

Profit for year

A

Operating profit + profit from other activities - net finance costs - tax

26
Q

Variance

A

Difference between actual and budgeted figure

Favourable results in profits being higher than forecasted
Adverse results in profits beings lower than forecast

27
Q

Contribution per unit

A

Selling price - Variable costs per unit

28
Q

Total contribution

A

Total revenue - total variable costs
OR
Contribution per unit X units sold

29
Q

Break even

A

Fixed costs / contribution per units

30
Q

On a break even chart….

A

The break even level output is the level of output at which revenue = total costs

31
Q

Margin of safety

A

Actual level of output - break even level of output

32
Q

Gross profit margin (%)

A

Gross profit / sales revenue X 100

33
Q

Operating profit margin (%)

A

Operating profit / sales revenue X 100

34
Q

Profit for year margin (%)

A

Profit for year / sales revenue X 100

35
Q

Labour turnover (%)

A

Number of staff leaving during the year / average number of staff employed by the business during the year X 100

36
Q

Employee retention rate (%) for a particular time period

A

Number of employees leaving / number of employees at end of period X 100

37
Q

Employees costs as a percentage of turnover

A

Employee costs / sales turnover X 100

38
Q

Labour cost per unit

A

Labour costs / units of output

39
Q

Return on capital employed (ROCE)(%)

A

Operating profit / total equity + non current liabilities X 100

40
Q

Capital employed

A

Equity + non current liabilities

41
Q

Current ratio

A

Current assets / current liabilities

42
Q

Gearing

A

Non current liabilities / total equity + non current liabilities (capital employed) X 100

43
Q

Payable days

A

Payables / cost of sales X 365

44
Q

Receivables days

A

Receivables / revenue X 365

45
Q

Inventory turnover

A

Costs of goods sold / average inventories held

To determine number of days DIVIDE by 365

Cost of sales / average inventories

46
Q

Average rate of return (%)

A

Average annual profit / investment cost X 100

Annual average profit = total net return minus the initial investment / number of years

47
Q

Net present value

A

Net return X discounter value

48
Q

Payback

A

A

49
Q

Net current assets

A

Current assets - current liabilities

The working capital that a business has available

50
Q

Net assets

A

Total assets - total liabilities I

The value of a business

51
Q

Total equity will always be equal to….

A

Net assets - it’s represents how a business has been financed

52
Q

Gross profit

A

Sales revenue - cost of sales

53
Q

Actual capacity (capacity utilisation top part)

A

Labour productivity (x per employee) x average number of employees

54
Q

Depeciaion

A

Cost - residual value (last) / estimated useful number of years

55
Q

Operating forfeit

A

Minus overheads from gross profit

Business Studies Formulas (1 decks)

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