Paper 2 Equations Flashcards
Describe the term Net Cash Flow:
The difference between all the cash entering the business and all of the cash leaving the business in a time period.
Describe the term Opening Balance:
The cash that was left in the business at the end of the last time period(i.e.the previous time periods closing balance)
Describe the term Closing Balance:
The net cash flow added to the opening balance for the time period.
Describe the term Break Even:
The point where all the total costs are covered by the total revenue.
Describe the term Break-Evan Quantity:
The number of units a business needs to sell to cover total costs with the total revenue.
What is the equation for Net Cash Flow?
Total inflow - total outflow
What is the equation to work out the Closing Balance of a business?
Net cash flow + opening balance
What is the equation for (Total) Sales Revenue?
Price x Quantity
What is the equation for (Total) Variable Costs?
Variable costs per unit x Quantity
What is the equation for Variable Costs (Per Unit)?
Total Variable Costs / Quantity
What is the Equation for (Total) Fixed Costs?
Sum of all the fixed costs
What is the equation for Average Fixed Costs?
(Total) Fixed Costs / Quantity
What is the equation for Total Costs?
(Total) Variable Costs + (Total) Fixed Costs
What is the equation to work out whether the business has profited or made a loss?
Total Revenue - Total Costs
What is the equation for Gross Profit?
Total Revenue - Cost Of Sales
What is the equation for Gross Profit Margin?
(Gross Profit / Total Revenue) x 100
What is the equation for Net Profit?
Total Revenue - Cost Of Sales - Expenses
What is the equation for Net Profit Margin?
(Net Profit / Total Revenue) x 100
What is the equation for Break-Even Quantity?
Fixed Costs / (Price - Variable Cost (per unit) )
What are the 3 steps to working out the Average Rate of Return (ARR)?
- Calculate the Total Profit From An Investment over its lifetime.
- Calculate the Average Profit From An Investment per year.
- Calculate the Average Rate Of Return From An Investment.
What is the equation for the Total Profit From The Investment?
Total income received from an investment over a given period of time - Cost of the investment
What is the equation for the Average Profit From The Investment?
Total profit from the investment / Number of years
What is the equation to work out the Average Rate of Return (ARR) for an investment?
(Average profit from the investment / Cost of the investment) x 100
