Theme 2 Flashcards
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 cost per unit
total costs
fixed costs + variable costs
gross profit
total sales revenue - costs of sale
gross profit margin
(gross profit / sales revenue) x100
operating profit
gross profit - expenses (fixed overheads)
operating profit margin
(operating profit / sales revenue) x100
net profit
operating profit - interest
net profit margin
(net profit / sales revenue) x100
break even
fixed costs / contribution per unit
contribution per unit
selling price per unit - variable cost per unit
total contribution
contribution per unit x number of units sold
margin of safety
actual/project sales - break even level of sales
closing balance
opening balance +/- net cash flow
net cash flow
total inflows - total outflows
payback period
costs of project or investment / monthly cash flow in year of payback
average rate of return (ARR)
((total net profit ÷ number of years) / initial cost) x100
net present value (NPV)
each year net cash flow x discount factor
need to add the discounted net cash flows for each year
current ratio
current assests / current liabilities
acid test ratio
(current liabilities - inventories) / current liabilities
productivity
total output / number of workers
capacity utilisation
(current output / maximum possible output) x100
labour/staff turnover
(number of employees that have left in a time period / average number of employees) x100
(average labour turnover is around 15%. 15-20% is ideal for businesses)
labour/staff retention rate
(number of employees that haven’t left / average number of employees) x100
absenteeism
(number of absence days taken by employees / total possible ‘workable’ days) x100
(lower rates are better. around 2% is acceptable)
return on capital employed (ROCE)
operating profit / capital employed
capital employed
total equity + non-current liabilities
gearing
(non-current liabilities / capital employed) x 100
