Theme 2 Calculations

Question 1

Gross profit margin

Answer 1

Gross profit
—————— x 100
Revenue

Question 2

Operating profit margin

Answer 2

Operating profit
———————— x 100
Revenue

Question 3

Profit for the year (net profit margin)

Answer 3

Net profit before tax
—————————— x 100
Revenue

Question 4

Working capital

Answer 4

Current assets - current liabilities

Question 5

Acid test ratio

Answer 5

Current assets - inventories (stock)
—————————————
Current liabilities

Question 6

Current ratio

Answer 6

Current assets
———————
Current liabilities

Question 7

Assets

Answer 7

Capital + liabilities

Question 8

Turnover/ Revenue/ Sales Revenue

Answer 8

Price x quantity of sales

Question 9

Gross profit

Answer 9

Revenue - cost of sales

Question 10

Operating profit

Answer 10

Gross profit - operating expenses (overheads)

Question 11

Profit for the year (net profit)

Answer 11

Operating profit - interest (and exceptional costs)

OR

operating profit +/- finance costs

Question 12

Contribution per unit

Answer 12

Selling price per unit - variable cost per unit

Question 13

Total contribution

Answer 13

Total revenue - total variable cost

OR

Unit contribution x number of units sold

Question 14

Break even

Answer 14

Fixed costs
__________________
Contribution per unit

Question 15

Net cash flow

Answer 15

Total inflows - total outflows

Question 16

Opening balance

Answer 16

Previous month’s closing balance

Question 17

Closing balance

Answer 17

Net cash flow + opening balance

Question 18

Sales volume

Answer 18

Sales revenue
———————
Price

OR

Total number of units sold over a period of time

Question 19

Sales revenue

Answer 19

Quantity sold x price

Question 20

Total variable costs

Answer 20

Number of units sold x variable cost per unit

Question 21

Total costs

Answer 21

Fixed costs + variable costs

Question 22

Profit

Answer 22

Total revenue - total costs

Question 23

Margin of safety

Answer 23

Actual sales level - breakeven level

Question 24

Profit (margin of safety)

Answer 24

Margin of safety (units) x contribution per unit

Question 25

Average cost/ unit cost

Answer 25

Total cost
—————
Output

Question 26

Variance

Answer 26

Actual - budget

Question 27

Productivity (labour)

Answer 27

Output per period (units)
______________________

Number of employees in that period

Question 28

Capacity utilisation

Answer 28

Actual level of output
_______________________ X 100

Maximum possible output