Theme 1 Formulas Flashcards

1
Q

The formula for Profit:

A

Profit = Total Revenue - Total Costs

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2
Q

The formula for Total Revenue:

A

Total Revenue = Sale price x quantity sold

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3
Q

The formula for Total Costs:

A

Total Costs = Fixed costs + Variable costs

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4
Q

The formula for Variable costs:

A

Variable costs = Variable cost per unit x quantity produced

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5
Q

The formula for calculating the break-even point:

A

BEP = FC/(Sale price - Variable cost per unit)

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6
Q

The formula for calculating the margin of safety:

A

MOS = Actual or projected break-even level of output - break-even point

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7
Q

How do you calculate the Total Inflows on a cash flow forecast?

A

Add up all inflows, including sales, loans, share capital (Be careful of credit sales!- Credit sales are recorded when they are actually received).

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8
Q

How do you calculate the Total Outflows on a cash flow forecast?

A

Add up all the outflows, such as; rent, loan repayments, salaries, wages, machinery.

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9
Q

How do you calculate the net cash flow?

A

Net cash flow = Total Inflows - Total Outflows

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10
Q

How do you calculate the opening balance?

A

Transfer the previous months closing balance to the next months opening balance.

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11
Q

How do you calculate the closing balance?

A

Closing balance = net cash flow + opening bank balance

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12
Q

How do you calculate the interest rate?

A

(Total repayment - borrowed amount)/Borrowed amount x 100

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13
Q

How do you calculate a percentage change?

A

(Difference/original number) x 100

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