ratios

Question 1

Revenue =

Answer 1

Selling price per unit * number of units sold

Question 2

Variable Costs =

Answer 2

Variable costs per unit * number of units sold

Question 3

Total Costs =

Answer 3

Fixed costs + Variable costs

Question 4

Profit =

Answer 4

Total revenue - total costs

Question 5

Market cap(italisation) =

Answer 5

Number of issued shares * share price

Question 6

Expected value =

Answer 6

Pay off * Probability

Question 7

Net gain =

Answer 7

Expected value - cost

Question 8

Market growth (%) =

Answer 8

(Change in market size/Original market size) * 100

Question 9

Market share (%) =

Answer 9

(Business sales / Total market sales) * 100

Question 10

Added value =

Answer 10

Revenue - Costs of bought-in goods and services

Question 11

Labour productivity =

Answer 11

Output / Number of employees

Question 12

Unit costs =

Answer 12

Total costs / Number of units of output

Question 13

Capacity utilisation (%) =

Answer 13

(Output / Maximum possible output) * 100

Question 14

Return on investment (%) =

Answer 14

(Profit from investment / Cost of investment) * 100

Question 15

Gross profit =

Answer 15

Revenue - cost of sales

Question 16

Operating profit =

Answer 16

Gross profit - operating costs

Question 17

Profit for the year =

Answer 17

Operating profit + profit from other activities - net finance costs - tax

Question 18

Gross profit margin (%) =

Answer 18

(Gross profit / revenue) * 100

Question 19

Operating profit margin (%) =

Answer 19

(Operating profit / revenue) * 100

Question 20

Profit for the year margin (%) =

Answer 20

(Profit for the year / revenue) * 100

Question 21

Variance =

Answer 21

Budgeted figure - actual figure

Question 22

Contribution per unit =

Answer 22

Selling price - variable costs per unit

Question 23

Total contribution =

Answer 23

Revenue - variable costs

Question 24

Break-even output =

Answer 24

Fixed costs / Contribution per unit

Question 25

Margin of safety =

Answer 25

Actual level of output - break-even level of output

Question 26

Labour turnover (%) =

Answer 26

(Number of staff leaving / number of staff employed) * 100

Question 27

Employee retention rate (%) =

Answer 27

(Number of employees who remained at the business for whole time period / number of employees at start of time period) * 100

Question 28

Employee costs as percentage of turnover =

Answer 28

(Employee costs / Turnover) * 100

Question 29

Labour costs per unit =

Answer 29

Labour costs / Units of output

Question 30

Return on capital employed (ROCE) (%) =

Answer 30

(Operating profit / Total equity + Non-current liabilities) * 100

Question 31

Current ratio =

Answer 31

Current assets / Current liabilities

Question 32

Gearing (%) =

Answer 32

(Non-current liabilities / Total equity + non-current liabilities) * 100

Question 33

Payable days =

Answer 33

(Payables / Cost of sales) * 365

Question 34

Receivable days =

Answer 34

(Receivables / Revenue) * 365

Question 35

Inventory turnover =

Answer 35

Cost of sales / Average inventories held

Question 36

Average rate of return (%) =

Answer 36

(Average annual return / Initial cost of project) * 100

Question 37

Price Elasticity of Demand (PED) =

Answer 37

% change quantity demanded / % change price

Question 38

Income Elasticity of Demand (YED) =

Answer 38

% chance quantity demanded / % change income

Question 39

Payback period =

Answer 39

Years before break even + (unrecovered amount / cash flow in recovery year*1.2)

Question 40

Net Present Value =

Answer 40

Net cash flow at time / (1+discount rate)*time

Question 41

What is sensitivity analysis?

Answer 41

Involves recalculating investment appraisal figures (e.g. what if costs were 5% lower, revenue 2% higher, etc.)

Question 42

What order is an income statement completed in?

Answer 42

Sales revenue - cost of sales - operating costs + other profits - financial costs - tax = profit for the year

Question 43

What is regarded as equity in a balance sheet?

Answer 43

Money raised from shareholders + retained profits

Question 44

What order is a balance sheet completed in?

Answer 44

Non current assets + current assets - current liabilities - non-current liabilities = net assets = total equity