Paper 2 : Equations Flashcards
Formula for Net Cash Flow in a cash flow forecast
Net cash flow= cash inflow –cash outflow
Formula for sales revenue
Sales revenue = selling price x sales volume
Formula for sales volume
sales volume = rales revenue / selling price
Formula for total costs
Total costs = fixed costs + variable costs
Formula for total variable costs
Total costs - fixed costs
or
average variable costs x output
Formula for average variable costs
variable costs / output
Formula for Breakeven
Break- even = total fixed costs / contribution per unit
Formula for contribution per unit
Contribution per unit = selling price – variable costs per unit
Formula for total contribution
contribution per unit x number of units sold
Formula for total profit
Total profits = contribution – fixed costs
Formula for margin of safety
Margin of safety = actual output – break even point
Formula for profit budgets
Profit budgets = income budget figures - expenditure budget figures
Formula for variance
Variance = actual figure – budgeted figure
Formula for the 3 types of profit
Gross profit =Total revenue – costs of sales
Operating profit = gross profit – other operating expenses
Net profit = operating profit - interest
The formula for the three profit margins
GPM = gross profit / revenue x100 OPM = operating profit / revenue x100 NPM = net profit / revenue x 100
Formula for current ratio
Current ratio = current assets ÷ current liabilities
formula for Acid Test Ratio
Acid test ratio = (current assets – inventory) ÷ current liabilities
Formula for working capital
current assets - current liabilities s
Formula for productivity
output per period / input per period
Formula for capital productivity and labour productivity
CAPITAL PRODUCTIVITY = OUTPUT PER TIME PERIOD/NO. MACHINES
LABOUR PRODUCTIVITY = OUTPUT PER TIME PERIOD
NO. WORKERS/HOURS WORKED
Formula for capacity utilisation
capacity utilisation = current output / maximum output x100
The 2 formulas used to work out the average basket value
Index number = (𝑎𝑣𝑒𝑟𝑎𝑔𝑒 ′𝑏𝑎𝑠𝑘𝑒𝑡′ 𝑣𝑎𝑙𝑢𝑒 /𝐵𝑎𝑠𝑒 𝑏𝑎𝑠𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒) 𝑥100
Average ‘basket’ value = 𝑖𝑛𝑑𝑒𝑥 𝑛𝑢𝑚𝑏𝑒𝑟 / 100 x 𝑏𝑎𝑠𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓′ 𝑏𝑎𝑠𝑘𝑒𝑡′
How to work out the exchange rate
- To convert from a single unit currency to a double, you will multiply by the exchange rate.
- To convert from a double unit to a single, you will divide by the exchange rate
How to work out moving averages when conducting quantitative sales forecasting ?
- Three quarter moving averages = add average of each period / 3
- Four quarter moving average = add together average of the 4 period / 4 (then add together the two answers and divide by 2)
Formula for cyclical variation
cyclical variation = actual figures- moving averages
Formula for payback period
Payback = investment / net cash flow of year paid back (x12)
(if consistent)
Payback = invested amount /annual cash flow (x100)
Formula for Average Rate of Return
average annual return / investment (x100)
Average annual return =net cash flow / total years
Formula for Net Present Value
NPV= sum of present value - cost of initial investment)
What are the two formulas needed when using decision trees ?
EMV = financial result x the probability
Net Gain = EMV – investment
What is the formula to work out the float time in critical path analysis ?
Float time = LFT –Duration – EST
Formula for current ratio?
Current ratio = current assets -/current liabilities
Formula for Acid test ratio?
Acid rest ratio = current assets - inventory / current liabilities
Formula for Gearing ratio?
Gearing ratio = non-current liabilities/capital employed (x100)
Capital employed = non-current liabilities - total equity
Formula for Return On Capital Employed
ROCE= operating profit /capital employed (x100)
Formula for Labour turnover
labour turnover = number of staff leaving / average number of staff (x100)
Formula for Labour Retention
Labour Retention = number of employees who have worked for a period / number at the end of the period (x100)
Formula for Absenteeism
Absenteeism = number of days absent in a period / total number of working days in the period
Formula for Labour productivity
Labour Productivity = Output per period / number of employees
