Theme 2 - Equations Flashcards
How to calculate average total costs
Total costs
—————-
Quantity
How do we calculate contributions
Selling price per unit - VC per unit
How to calculate break even
Fixed costs
——————
Contribution
How to calculate gross profit
Revenue - cost of sales
How to calculate operating profit
Gross profit - Operating expenses
How to calculate net profit
Operating profit - (net interest + exceptional costs)
How to work out profit for the year
Operating profit - exceptional costs - Interest
Gross profit margin
Gross profit
—————— x 10
Revenue
Operating profit margin
Operating profit
————————- x 100
Revenue
Net profit margin
Profit for the year
————————— x 100
Revenue
What are the two ways of measuring liquidity
- The current ration
- Acid test ration
How to calculate the current ratio
Current assets
———————-
Current liabilities
(Answer expressed as ratio to :1)
Acid test ration
Current assets - inventory
————————————-
Current liabilities
(Expressed as ration to :1)
How to calculate labour productivity
Output
————
Number of workers
Capital productivity
(Output of capital employed)
Output
————
Num of machinery
Efficiency
(Average cost per unit)
Total costs
——————
Number of units
Capacity utilisation margin
Current output
———————— X 100
Max possible output
