Mathematic Equations

Question 1

Total costs

Answer 1

Fixed cost + variable cost

Question 2

Profit

Answer 2

Revenue - total cost

Question 3

Variable cost

Answer 3

Variable cost per unit x number of units sold

Question 4

Revenue

Answer 4

Selling price per unit x number of units sold

Question 5

Market capitalisation

Answer 5

Number of issued shares x current share price

Question 6

Expected value

Answer 6

(Pay-off A x prob A) + (pay-off B x prob B)

Question 7

Net gain

Answer 7

Expected value - initial cost

Question 8

What is market size volume?

Answer 8

The quantity of product produced in a particular market is a period of time

Question 9

What is market size value?

Answer 9

The total sales revenue generated from selling all of the goods and services produced in a particular market

Question 10

Market growth

%

Answer 10

(Change/current) x 100

Question 11

Sales growth

%

Answer 11

(Change/current) x 100

Question 12

Market share

%

Answer 12

(Sales of individual/sales of market) X 100

Question 13

PED

Answer 13

(Percentage change in quantity demanded/percentage change in price) X 100

Question 14

Added value

Answer 14

Sales revenue - cost of bought in product

Question 15

Labour productivity

Answer 15

Output / number of employees

Question 16

Unit cost

Answer 16

Total cost of production / output produced

Question 17

Capacity utilisation

%

Answer 17

(Actual output / maximum output) x 100

Question 18

Return on investment

%

Answer 18

(Return / cost) x 100

Question 19

Gross profit

Answer 19

Revenue - cost of sales

Question 20

Operating profit

Answer 20

Revenue - (cost of sales + indirect costs)

Question 21

Profit for the year

Answer 21

Total profit - (net finance cost - tax)

Question 22

Define variance

Answer 22

The difference between actual and budgeted figure

Question 23

Define favourable variance

Answer 23

Figures favourable to the business

Hi sales or profits, lower costs

Question 24

Define adverse variance

Answer 24

Figures harmful to the business

Lower sales or profit, higher costs

Question 25

Contribution per unit

Answer 25

Selling price - variable cost per unit

Question 26

Total contribution 2

Answer 26

Contribution per unit x units produced or sold Total revenue - total variable cost

Question 27

Break-even output

Answer 27

Fixed cost / contribution per unit

Question 28

What is break-even output on a break-even chart?

Answer 28

When revenue equals cost

Question 29

Margin of safety

Answer 29

Actual level of output - breakeven level of output

Question 30

Gross profit margin | %

Answer 30

(Gross profit / sales revenue) x 100

Question 31

Operating profit margin | %

Answer 31

(Operating profit / sales revenue) x 100

Question 32

Profit for the year margin | %

Answer 32

(Profit for the year / sales revenue) x 100

Question 33

Labour turnover | %

Answer 33

(Number of staff leaving during the year/ average staff employed during the year) x 100

Question 34

Employee retention rate | %

Answer 34

(Number of staff who stay the whole time during the year/ staff employed during the year) x 100

Question 35

Employee costs as a % of turnover

Answer 35

(Employee cost / sales revenue) x 100

Question 36

Labour cost per unit

Answer 36

Labour cost / units of output

Question 37

ROCE | %

Answer 37

(Operating Profit / capital employed) x 100

Question 38

Capital employed

Answer 38

Total equity + non-current liabilities

Question 39

Current ratio

Answer 39

Current assets / current liabilities

Question 40

Gearing | %

Answer 40

Non-current liabilities / capital employed

Question 41

Payables (creditors) days

Answer 41

(Payables / cost of sales) x 365

Question 42

Receivables (debtors) days

Answer 42

(Receivables / sales revenue) x 365

Question 43

Inventory turnover

Answer 43

Cost of goods sold / average inventories held

Question 44

Average rate of return | %

Answer 44

((Net return of profit/number of years) / initial cost of project) x 100