ratios Flashcards
Revenue =
Selling price per unit * number of units sold
Variable Costs =
Variable costs per unit * number of units sold
Total Costs =
Fixed costs + Variable costs
Profit =
Total revenue - total costs
Market cap(italisation) =
Number of issued shares * share price
Expected value =
Pay off * Probability
Net gain =
Expected value - cost
Market growth (%) =
(Change in market size/Original market size) * 100
Market share (%) =
(Business sales / Total market sales) * 100
Added value =
Revenue - Costs of bought-in goods and services
Labour productivity =
Output / Number of employees
Unit costs =
Total costs / Number of units of output
Capacity utilisation (%) =
(Output / Maximum possible output) * 100
Return on investment (%) =
(Profit from investment / Cost of investment) * 100
Gross profit =
Revenue - cost of sales
Operating profit =
Gross profit - operating costs
Profit for the year =
Operating profit + profit from other activities - net finance costs - tax
Gross profit margin (%) =
(Gross profit / revenue) * 100
Operating profit margin (%) =
(Operating profit / revenue) * 100
Profit for the year margin (%) =
(Profit for the year / revenue) * 100
Variance =
Budgeted figure - actual figure
Contribution per unit =
Selling price - variable costs per unit
Total contribution =
Revenue - variable costs
Break-even output =
Fixed costs / Contribution per unit
Margin of safety =
Actual level of output - break-even level of output
Labour turnover (%) =
(Number of staff leaving / number of staff employed) * 100
Employee retention rate (%) =
(Number of employees who remained at the business for whole time period / number of employees at start of time period) * 100
Employee costs as percentage of turnover =
(Employee costs / Turnover) * 100
Labour costs per unit =
Labour costs / Units of output
Return on capital employed (ROCE) (%) =
(Operating profit / Total equity + Non-current liabilities) * 100
Current ratio =
Current assets / Current liabilities
Gearing (%) =
(Non-current liabilities / Total equity + non-current liabilities) * 100
Payable days =
(Payables / Cost of sales) * 365
Receivable days =
(Receivables / Revenue) * 365
Inventory turnover =
Cost of sales / Average inventories held
Average rate of return (%) =
(Average annual return / Initial cost of project) * 100
Price Elasticity of Demand (PED) =
% change quantity demanded / % change price
Income Elasticity of Demand (YED) =
% chance quantity demanded / % change income
Payback period =
Years before break even + (unrecovered amount / cash flow in recovery year*1.2)
Net Present Value =
Net cash flow at time / (1+discount rate)*time
What is sensitivity analysis?
Involves recalculating investment appraisal figures (e.g. what if costs were 5% lower, revenue 2% higher, etc.)
What order is an income statement completed in?
Sales revenue - cost of sales - operating costs + other profits - financial costs - tax = profit for the year
What is regarded as equity in a balance sheet?
Money raised from shareholders + retained profits
What order is a balance sheet completed in?
Non current assets + current assets - current liabilities - non-current liabilities = net assets = total equity
