Theme 1 Formulas Flashcards
The formula for Profit:
Profit = Total Revenue - Total Costs
The formula for Total Revenue:
Total Revenue = Sale price x quantity sold
The formula for Total Costs:
Total Costs = Fixed costs + Variable costs
The formula for Variable costs:
Variable costs = Variable cost per unit x quantity produced
The formula for calculating the break-even point:
BEP = FC/(Sale price - Variable cost per unit)
The formula for calculating the margin of safety:
MOS = Actual/projected break-even level of output - break-even point
How do you calculate the Total Inflows on a cash flow forecast? (include some examples of inflows)
Add up all inflows, including sales, loans, share capital (Be careful of credit sales!- Credit sales are recorded when they are actually received).
How do you calculate the Total Outflows on a cash flow forecast? (include some examples of outflows)
Add up all the outflows, such as; rent, loan repayments, salaries, wages, machinery.
How do you calculate the net cash flow?
Net cash flow = Total Inflows - Total Outflows
How do you calculate the opening balance?
Transfer the previous months closing balance to the next months opening balance.
How do you calculate the closing balance?
Closing balance = net cash flow + opening bank balance
How do you calculate the interest rate?
(Total repayment - borrowed amount)/Borrowed amount x 100
How do you calculate a percentage change?
(Difference/original number) x 100
