formulas for business

Question 1

profit

Answer 1

profit =revenue - costs

Question 2

total costs

Answer 2

total costs = fixed costs + variable costs

Question 3

percentage change

Answer 3

percentage change = (final value - initial value ) / initial value x 100

Question 4

percentage growth

Answer 4

percentage growth = (change in sales / existing sales ) x 100

Question 5

market share

Answer 5

market share = (sales of business / total market sales ) x 100

Question 6

market capitalisation

Answer 6

market capitalisation = number of shares x share price

Question 7

PED

Answer 7

PED = %change in demand / %change in price

Question 8

YED

Answer 8

YED = %change in demand / %change in income

Question 9

contribution

Answer 9

contribution = sales revenue - variable costs

Question 10

contribution per unit

Answer 10

contribution per unit = sales price per unit - variable costs per unit

Question 11

breakeven

Answer 11

breakeven = fixed costs / contribution per unit

Question 12

labour turnover

Answer 12

labour turnover =( number of staff leaving per year / average number of staff ) x 100

Question 13

labour retention

Answer 13

labour retention = number of employees with one or more years of service / overall workforce numbers

Question 14

labour productivity

Answer 14

labour productivity = total output / number of employees

Question 15

labour costs as a % of turnover

Answer 15

(labour costs / revenue ) x 100

Question 16

labour cost per unit

Answer 16

labour cost per unit = labour costs / output

Question 17

gross profit

Answer 17

(revenue or sales) - (cost of sales or variable costs

Question 18

operating profit

Answer 18

gross profit - fixed costs

Question 19

net profit or profit of the year

Answer 19

(operating profit - tax) +- interest

Question 20

expected value (decision trees)

Answer 20

EV = (probability x outcome 1) + (probability x outcome 2)

Question 21

current ratio

Answer 21

current ratio = current assets / current liabilitiesgr

Question 22

gearing ratio

Answer 22

gearing ratio = (non current liabilities / capital employed) x 100

Question 23

capital employed

Answer 23

capital employed = total equity + non-current liabilities

Question 24

profit margin

Answer 24

profit margin =( profit / revenue ) x 100

Question 25

return on capital employed

Answer 25

ROCE = (operating profit / capital employed) x 100

Question 26

inventory turnover ratio

Answer 26

costs of sales / inventory( number of per year stock is replenished)

Question 27

receivables days ratio

Answer 27

(trade receivables / revenue) x 365

Question 28

payables days ratio

Answer 28

(trade payables / cost of sales) x 365

Question 29

payback

Answer 29

number of full years + (the amount of cost left / the revenue generated the next year )

Question 30

average rate of return

Answer 30

net return = total net cash flows - initial outlay
average annual return = net return / life expectancy
average rate of return = (average annual return / initial outlay ) x 100

Question 31

net present value

Answer 31

net cash flow x discount factor

Question 32

net gain

Answer 32

ev - costs

Question 33

balance sheet format

Answer 33

non-current assets
current assets
current liabilities
net current liabilities
non-current liabilities
net assets (same)
total equity (same)