Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Numerical Skills > Numerical Lines Of Analysis And Formulas > Flashcards

Numerical Lines Of Analysis And Formulas Flashcards

1
Q

Percentage change formula

A

Change
———X100
Original

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Index numbers formula

A

New year price
——————— X 100
Base year price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Market share formula

A

Total sales revenue of the company——————————————- X100
total sales revenue at the market


How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Volume of product in market formula

A

Total volume of the product
——————————— X100
Total sales volume of the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Market growth formula

A

Difference in total sales revenue of the market
————————————— X100
Original sales revenue of the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Volume of product in market growth formula

A

Difference in total sales volume of the market
———————————————X100
Original sales volume of the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Market share / Market Growth analysis

A

Competitive advantage eg customer service -) differentiation -) price inelastic -) increase price without significant fall in demand -) increase sales revenue -) potentially more than rivals -) increasing market share by value.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

PED formula

A

% change in quantity demanded
———————————————
% change in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Price elastic analysis

A

Due to poor customer service a business product may become price elastic -) leading to customer being less loyal to brand -) increasing SP leads to significant fall in demand -) pressure to keep prices low -) lower revenue -) reducing gross profit margin.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Price inelastic analysis

A

Through Rand D -) differentiate -) customers likely to stay loyal as can’t get same products from competitors -) making them price inelastic so can charge higher prices without a significant fall in demand -) increased revenue -) increased gross profit margin.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

YED formula

A

% change in demand
——————————
% change in income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Luxury goods analysis

A

Business vulnerable to changes in average incomes -) if many people lose their jobs there will be a fall In incomes -) lead to significant fall in demand for a business’s goods as consumer switch to cheaper alternatives -) fall in revenue resulting in fall in gross profit -) lead to operating loss putting them under pressure to reduce their expenses -) could sell their NCA eg stores and factories -) reducing scale.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Normal goods analysis

A

If business sells normal goods likely to have stable predictable sales -) this is because when incomes change demand does not change much -) unlikely to see significant rise or fall in profits when income changes -) unlikely to make a loss and then keep up with loan repayments -) Result in them getting low interest rates on loans leading to lower expenses -) business attractive to banks as it’s seen as a safe investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Inferior goods analysis

A

When unemployment is high then incomes will be lower and therefore the demand of inferior goods will increase -) the may need to be flexible to be able to respond to unexpected change in income so they can increase production of a good to meet the new demand -) increase in gross profit -) flexibility helps reduce production when incomes rise again -) This will help ensure that they can reduce operating expenses when demand falls therefore avoiding losses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Cost plus pricing formula

A

Total costs X 1.1 if mark up is 10%
1.2 if mark up is 20% 1.3 if markup is 30%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Break even formula

A

Fixed costs
—————
SP - VC (CPU)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Break even analysis

A

By switching from ethically sourced materials they may be able to reduce VC -) as able to use material that is cheaper than recycled there’s plastic bottles -) a lower price for raw materials will lower the economic manufacturing cost -) increasing the contribution per bag or wallet -) leading to a lower break even point -) meaning less units need to be sold to make a profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Budgets formula

A

Income:

Income budget - calculate revenue (sales volume x price)

Actual income - calculate revenue (Sv x price)

Variance income - difference between actual and budgeted

If it’s more than plan it’s favourable
If it’s less than planes it’s adverse

Profit:

Income budget - expenditure budget
Income actual - expenditure actual
Variance - actual profit - budget profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Budget analysis

A

Budgets allow businesses to plan for the future -) they can plan their expenditure in advance -) reduces the chances of overspending -) lower cash outflows -) positive net cash flow -) increased cash reserves -) better liquidity -) able to pay day to day bills.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Cash flow formulas

A

Total cash outflows - add up all cash inflows

Total cash outflows- add up all cash outflows

Net cash flow - inflows - outflows

Opening balance - closing balance from previous month

Closing balance - opening balance add net cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Cash flow analysis

A

Business may experience fluctuations in sales -) means that they experience a reduction in cash inflows at certain times -) so if they can accurately forecast cash flow the business may be able to plan accurately -) such as reducing their staff numbers if they forecast lower cash inflows during these periods -) allowing them to reduce their wages and subsequent cash outflows -) improving net cash flow during peak seasons and ensuring they have sufficient levels of cash to keep up with essential payments such as wages.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Productivity formula

A

Total output
————x100
Total inputs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Productivity analysis

A

As businesses grow they begin to make better use of capital / machinery or have the resources to invest in more -) an increase use of machinery will improve productivity and further increase output -) spreading FC of production over more units eg rent or utilities -) allowing business to lower SP increase gross profit margin -) lower unit costs of producing a product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Profits formula

A

Profit - SP - COS

Gross profit - SR - COS

Operating profit - GP - expenses

Net profit - Gross profit - total expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Profit margin formula

A

GP
— X 100
SR

OP
—X100
SR

Net profit
———X100
Sales revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

ROCE formula

A

Operating profit
———————X 100
Capital employed
(NCL + total equity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

High ROCE formula

A

Business has a higher ROCE -) business is making efficient use of its capital to generate profit -) high profitability -) higher return on investment for shareholders -) increase in dividends paid -) business more attractive to investors -) higher share price -) able to generate more capital by selling shares in the future.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Low ROCE

A

The business has a low ROCE -) not making efficient use of the capital to generate profit -) low profitability -) lower return on investment for shareholders -) may be unable to pay hide dividends -) business is less attractive to shareholders -) cannot increase share price -) unable to raise much capital by selling shares in the future.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Gearing formula

A

Non current liabilities
—————————X 100
Capital employed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

High gearing analysis

A

High amount of capital financed through debt -) increased cash outflows for loan capital repayments -)and interest repayments -) reducing cash reserves -) reduced current assets -) lower current ratio -) Poor liquidity -) difficult meeting current liabilities such as payables when due

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

High gearing taking opportunities analysis

A

High amount of capital finance to debt -) increase capital within the business opportunity to invest into increasing scale -) such as additional factory or machinery -) opportunity to achieve technical economies of scale -) improve productivity and increase output -) fixed cost of production spread over more units -) Lower unit fixed costs.

32
Q

Low gearing analysis

A

Lower amounts of capital finance through debt -) reduced cash out for a loan capital repayments -) Less interest to be paid compared to high gearing -) ensuring no additional strain placed on cash reserves. -) Increased current assets -) High current ratio -) Good liquidity able to meet current liability such as payables -) no risk of having to sell non-current assets to use as cash.

33
Q

Low gearing missed opportunity analysis

A

Low amount of capital finance through debt -) reduced capital within the business -) missed opportunity to borrow capital that could be used to invest into increasing scale -) such as additional factory or machinery -) Better opportunity to capitalise on increased demand -) increase sales revenue that could help business increase market share.

34
Q

Liquidity ratio formula

A

CA
—
CL

35
Q

What is the ideal current ratio and acid test ratio

A

Ideal CR = 1.5 - 3.1
Below = 1.5 - 1
Above = 3 - 1

Acid test = current assets - stock divided by the current liabilities 

Ideal = 0.75 , 1, 1.5
Below = 0.75,1
Above = 1.5, 1

36
Q

High liquidity analysis

A

High liquidity, current ratio of 1.5 acid test above 1 -) high amount of cash reserves are working capital -) keep up with payments to suppliers and banks -) what have to sell non-current assets to keep up with day-to-day bills -) likely to have uninterrupted business operations reducing risk of failure

37
Q

Low liquidity analysis

A

Low liquidity, current ratio below 1 acid test below 0.75 -) low levels of cash reserves -) Business will struggle to pay suppliers and banks -) may be forced to sell non current assets to pay day-to-day bills -) may lead to disruption in business operations leading to high risk of failure.

38
Q

Labour turnover formula

A

Number of employees leaving during a period
———————————————X 100
Average number employed during period

Or

Number at the beginning, add number at the end divided by 2

39
Q

Labour turnover analysis

A

Business will aim to reduce the labour turnover -) as a high labour turnover means a business will be recruiting a large number of new employees -) this will increase business is cash outflows -) as new employees will require induction training -) placing a strain on the cash reserves -) reducing the current assets -) reducing current ratio -) leading to poor liquidity.

40
Q

Labour retention formula

A

Number of staff staying
———————————- X 100
average number of staff in post

41
Q

Labour retention analysis (adapt if it’s a service business)

A

Business will aim to have a high rates of labour retention -) as a high level of labour retention means that the majority of a business is staff remain at the business -) meaning of business will not need to recruit a large volume of new employees -) reducing labour costs as they will not need to conduct induction training -) reduced cash out those cash reserves remain high, high current assets. Good liquidity

42
Q

Absenteeism formula
(Number of employees absent during a period)

A

Number of employees absent during a period
———————————————X100
Number employees during period

43
Q

Annual absenteeism formula

A

Total num of staff absent over a year
———————————————X100
Total number of staff days that should have been worked

44
Q

Absenteeism analysis
Adapt if business is a service

A

Business will aim to reduce their absenteeism -) as a high level of absenteeism means a large proportion of the business staff will be absent over a certain period -) meaning a business will struggle to operate with high level of productivity
-) capacity utilization would be low -) so their FC would be spread over less units -) increasing unit FC -) reducing operating profit margin

45
Q

Exchange rates formula

A

£1 = $ 1.50

From pound to dollars X

From dollars to pounds divide

46
Q

Strong pound benefit

A

The pound buys more forighn currency -) less pounds required to buy foreign currency -) therefore less pounds required to buy foreign goods -) cheaper to import raw materials -) lower cost of sales -) can lower selling price OR there higher gross profit.

47
Q

Strong pound drawback

A

Foreign currency buys less pounds -) more foreign currency needed to buy pounds -) therefore price of um goods increase for foreigners -) I’m exports are dearer and less competitive -) fall in demand for uke goods -) pressure to keep prices low OR lower gross profit

48
Q

Strong pound drawback

A

The pound buys more foreign currency -) less pounds required to buy foreign currency -) before less pounds required to buy foreign goods -) foreign competitors appear cheaper -) customers switch to foreign imports -) fall in demand for domestic businesses

49
Q

Weak pound benefit

A

Foreign currency buys more pounds -) less foreign currency needed to buy pounds -) therefore price of um goods falls for foreigners -) um exports are more cheaper and more competitive -) rise in demand for his goods -) economies of scale.

50
Q

Weak pound benefit

A

Pound buys less foreign currency -) more pounds needed to buy foreign currency -) foreign goods become more expensive as more pounds required to purchase them -) foreign competitorsunable to compete on price -) increase in demand for domestic businesses

51
Q

Weak pond drawback

A

Pound buys less foreign currency -) more pounds needed to buy foreign currency -) foreign goods become more expensive as more pounds required to purchase them -) increasing cost of raw materials of business relies on foreign goods -) increasing cost of sales -) lower gross profit margin -) or pressure to keep prices low this impacts of good is price elastic

52
Q

Moving averages

A

3 Point moving average = taking a number in the series with the previous and next numbers and dividing by 3

4 point moving average = adding 4 together then dividing by 4

8 point moving average = adding the first 2 four point averages

Variation = calculated by working at the difference between the actual sales volume and the trend.

53
Q

Moving averages sales increasing analysis

A

The moving average shows sales are increasing -) numerical evidence -) therefore the business should reinvest in increasing capacity -) in order to keep up with rising demand -) increasing sales volume -) able to spread FC over more units -) lower fc per unit -) increasing operating profit margin

54
Q

Moving avarages sales falling

A

The moving average shows ales falling -) include numerical evidence -) therefore businesses should try to diversify their product portfolio -) invest in different products -) in order to spread risk if sales continue t ok I fall -) able to maintain high revenue -) keep high profit margins

55
Q

Moving averages seasonal analysis

A

The business has higher sales in specific quarters -) include numerical evidence -) the rode business is likely to be seasonal -) meaning that they may have a negative net cashflow in other months -) giving them lower cash reserves -) poor liquidity

56
Q

Investment appraisal payback

A

Amount left to pay
———————x52
Cash flow of the next year

57
Q

Quick Payback analysis

A

Investment pays off initial cost relatively quick -) if a loan was used for the initial investment -) the long period will be shorter -) reducing interest payments -) lower cash outflows -) improved liquidity -) able to reinvest cash reserves into other projects such as…

58
Q

Long payback analysis

A

Investment pays off initial cost slowly -) the business will need to wait for a longer time to recover their investment -) reduced cash reserves as cash is tied up in investment -) reducing g current assets -) poor liquidity -) may be unable to pay day to day bills -) risk of failure

59
Q

Net present value formula

A

Add all year return figures then minus the inital investment and divide by the number of years

60
Q

Average rate of return formula

A

Total net profit / num of years
—————————————— X100
Initial cost

Net profit = gross profit minus operating expenses and taxes.

61
Q

High NPV or ARR

A

Increased profitability -) increasing the business retained profit -) increased in total equity -) able to reinvest in further expansion of the business -) increased capacity -) may be able to gain economies of scale

62
Q

Low NPV or ARR

A

Low return on the investment -) lower operating profit -) lower ROCE -) unable to pay high didvidents to share holders -) less attractive to investors -) share price may fall -) difficult to raise capital I the future

63
Q

Drawback of all investment appraisals

A

Future cash flows are based on predictions -)therefore are vulnerable to external factors -) PESTLE factors -) could lead to predicted net cash flow to be lower than usual -) therefore investment appraisal is innacurrat -) meaning they can’t be relied on

64
Q

Critical path formula

A

Do a past paper Q on critical path

65
Q

Benefit Critical path analysis

A

Calculating critical path allows a business to allocate resources appropriately to the critical path -) adapt so resources are specific to business eg cash or labour -) ensures project runs efficiently -) project is not delayed -) why is it important the project is not being delayed

66
Q

Drawback of critical path

A

Critical path analysis is based on assumptions and predictions -) so the business cannot account for changes in PESTEL factors -) this may mean that an activity will take longer than expected -) disrupting the project -) meaning business may need to allocate cash reserves to labour for longer than planned -) Link to balance sheet

67
Q

Capacity utilisation formula

A

Actual output
—————X 100
Max output

68
Q

The benefit of high capacity utilisation to manufacturing business

A

Through improving worker motivation or advancement in production technology -) increased productivity -) increase output -) improve capacity utilization -) FC of production eg rent -) spread over more units -) lower unit fc -) increase operatinv profit margin of opportunity to decrease selling price -)

69
Q

Benefit of high capacity utilization to service business

A

Through exceptional customer service or high level of diffrentiaition -) business will have high sales volume -) increased number seats filled -) improved capacity utilization-) FC of providing a service eg rent wages -) spread over more units -) lower unit fc -) increase operating profit margin or opportunity to decrease selling price

70
Q

Drawback of high capacity utilization manufacturing business

A

operating with high capacity utilisation will mean that the business are working for long periods -) to produce high levels of output -) increased chance of machine failure -) disruption in the production process -) Increase expenses as business will need to spend on repairs -) poor customer service as long lead time.

71
Q

Drawback of high capacity utilisation service business

A

operating with high capacity utilisation -) means employees may be working for long periods -) To ensure business has strong brand reputation -) high percentage of seats full -) employees may feel overworked -) safety needs will not be met according to Maslow‘s hierarchy of needs -) employees become demotivated -) May look for employment elsewhere increasing labour turnover -) this will increase expenses as they will need to provide training costs to new employees

72
Q

benefit of low capacity utilisation for manufacturing business

A

Operating with low capacity utilisation -) will mean that businesses has time to service machinery in between production -) to reduce the chance of machine failure -) as machinery will need to be constantly in operation as capacity utilisation is low -) reducing the business expenses as less likely to need to repair machinery explain the benefits of reduced expenses -) or will retain positive brand image as no delay in production process -) making them differentiated -) price inelastic -) Can you increase the selling price without significant role in demand

73
Q

Benefit of low capacity utilisation service business

A

operating with low capacity utilisation-) means that employees will not be working for long periods as service may not be as busy -) improving working conditions -) ensuring safety needs are met according to Maslow’s hierarchy of needs -) and highly motivated delivering exceptional Customer service -) increase in the level of differention -) according to porters differentiation strategy -) the service becomes more price inelastic -) and therefore can increase the selling price without a significant fall in demand -) increasing sales revenue -) gross profit -) operating profit-) retained profit and total equity

74
Q

Drawback of low capacity utilisation for manufacturing business

A

Operating with low capacity, utilisation -) Means that the business is not fully utilising its resources -) Low levels of productivity -) reduced output -) fix costs of production are spread over less units eg rent wages and insurance -) increased unit fixed cost -) lower operating profit margin -) less profit to retain reinvest.

75
Q

Drawback of low capacity, utilisation for service business

A

operating with low capacity utilisation-) means that the business is not for fully utilising its resources-) Low percentage of seats filled -) lower sales Volume -) fixed cost of providing a service are spread over less seats eg wages -) increased unit FC -) lower operating profit -) less profit to retain and reinvest.

Numerical Skills (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions