Section 5 Formulae Flashcards
Net cash flow
cash inflow – cash outflow
Relation between closing cash balance and opening cash balance
Same for consecutive months
closing of month one becomes opening of month two
Profit
Total revenue - Total costs
Revenue formula
Number of units sold * price per unit
2 types of costs
add up to make what?
variable costs
fixed costs
total cost = variable costs + fixed costs
Gross profit
Revenue - cost of good sold (variable costs)
Gross profit margin
Gross profit/revenue * 100
Net profit
Gross profit - Overhead costs (fixed costs) - depreciation + non-trading income
Net profit margin
Net profit/revenue * 100
Retain profit formula
Net profit - interest - dividend - taxes
Equity formula
Total assets - total liabilities
Working capital
Current assets - current liabilities
Shareholders’ fund
Retained profit + money invested in business from shareholders when they purchase shares
Capital employed
Shareholders’ funds + Non-current liabilities
Current ratio
range
Current assets/current liabilities
1.5 to 2
