Theme 2 Flashcards
Net cash flow
total inflows - total outflows
sales volume
total number of units sold over a period of time
sales revenue
number of units sold x unit price
total variable costs
number of units sold x variable costs per unit
total costs
fixed cost + variable cost
Contribution per unit
selling price per unit - variable cost per unit
Total contribution
contribution per unit x number of units sold
Breakeven
fixed costs/ contribution per unit
variance
actual - budget
gross profit
revenue - cost of sales
operating profit
gross profit - overheads
net profit
operating profit - finance costs
gross profit margin
GP/revenue x 100
operating profit margin
OP/revenue x 100
net profit margin/profit for the year
NP/revenue x 100
current ratio
current assets/ current liabilities
acid test ratio
current assets - stock/ current liabilities
labour productivity
output per period/number of employees in that period
Capacity utilisation
actual level of output/max possible output x 100
what should current ratio be
1.5 is good
-less than 1 you do not have enough current assets to match current liabilities
what should acid test radio be
1 is good
margin of safety
actual output - breakeven output
profit
revenue - total costs
