FORMULAS AND KEY DATA Flashcards
Total costs
Fixed costs + Variable costs
Profit
Total revenue - Total costs
OR
Total contribution - Fixed
Variable costs
(total variable costs)
Variable cost per unit x Number of units sold
Total revenue
(sales revenue/ turnover)
Selling price per unit x Number of units sold
Market capitalisation of a business
Number of shares issued x current share price
Expected value
(decision trees)
(P1 x outcome) + (P2 x outcome)
Net gain
(decision trees)
Expected value - associated cost
(initial cost of decision)
Market size (volume)
Quantity of goods and services produced in a particular market over a period of time (usually 1 year)
Market size (value)
Total sales revenue generated from selling all goods and services produced in a particular market over a period of time (usually 1 year)
Sales volume
Quantity of goods and services produced by a particular business over a period of time (usually 1 year)
Sales value
Total sales revenue of a particular business over a period of time (usually 1 year)
Market growth %
in year ‘X’
change in size of market between year1 and year2
——————————–x100
size of market in year1
Sales growth %
in year ‘X’
change in sales of a product/business between year1 and year2
————————–x100
sales of product/business in year1
Market share %
Sales of one product/brand/business
——————————x100
Total sales in the market
PED
% change in price
YED
% change in income
YED INelastic coefficient
between -1 and +1
YED ELASTIC coefficients
less than -1
more than +1
YED normal, luxury and inferior goods coefficients
normal good= above 0
luxury good= above +1
Inferior good= below 0
Price INelastic coefficient
0 to -1
Price ELASTIC coefficient
below -1
Added value (value added)
Sales revenue - costs of bought in goods and services
Labour productivity
Number of employees
Unit costs (average costs)
Number of units of output produced
Capacity utilisation %
Actual output in given time period
——————————–x100
Maximum output in given time period
Return on investment %
Return on investment (£)
—————————–x100
Cost of investment (£)
Gross profit
Sales revenue - Cost of sales
Operating profit
(profit from operations)
Sales revenue - Cost of sales - Operating expenses
Profit for the year
Operating profit + Profit from other activities - Net finance - Tax
Variance
The difference between an actual and budgeted figure.
Favourable variance
Profits higher than forecasted
Adverse variance
Profits lower than forecasted
Contribution per unit
Selling price - Variable costs per unit
Total contribution
Contribution per unit x units produced/sold
OR
Total revenue - Total variable costs
Break-even output
Selling price - Variable costs per unit
(contribution per unit)
Break-even level of output
Where total revenue equals total costs
Break-even- Level of profit at a given level of output
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
—————- x 100
Sales revenue
Operating profit margin %
Operating profit
————————x100
Sales revenue
Profit for year margin %
Profit for year
———————-x100
Sales revenue
Labour turnover %
Number of staff leaving during the year
——————————x100
Average number of staff employed by business during the year
Employee retention rate for particular time period %
Number of employees at end of period - Number of leavers
————————-x100
Number of employees at end of period
Employee costs as percentage of turnover %
Employee costs
————————-x100
Sales turnover
Labour costs per unit
Units of output
Return on capital employed (ROCE) %
Operating profit
———————–x100
total equity + non current liabilities
(capital employed)
Capital employed
Total equity + non current liabilities
Current ratio
Current liabilities
Gearing %
non current liabilities
—————————x100
total equity + non current liabilities
(capital employed)
Payables days
Payables (creditors)
————————– x365
Cost of sales
Receivables days
Receivables (debtors)
—————————— x365
Cost of sales
Inventory turnover
Average inventories held
Average rate of return %
Net return from project (£) or number of years
——————————x100
Initial cost of project (£)
Month of payback
net cash flow next year / 12
