Theme 2 - Formulas Flashcards
Gross Profit
(Revenue) - (Cost of sales)
Operating profit
(Gross Profit) - (Fixed Overheads)
Net Profit
(Operating Profit) - (Financing and tax)
Gross Profit Margin
(Gross profit) / (sales revenue) x100
Operating Profit margin
(Operating profit) / (sales revenue) x100
Net Profit Margin
(Net profit) / (sales revenue) x100
Current Ratio
(Current Assets) / (Current Liabilities), this is expressed as a ratio
The ideal ratio is 1.5:1, meaning £1.50 of assets for £1 of current liabilities
Acid Test Ratio
(Current Assets - inventories) / (Current liabilities)
The ideal ratio is 1:1, showing they have eqaul liquid assets to liabilities
Break-even point
(Fixed Costs) / (Price - variable costs per unit(otherwise know as contribution per unit))
Capacity Utilisation
(Current Output) / (Max possible Output) x100
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 cost per unit
Total costs
Fixed costs + variable costs
Contribution per unit
Selling price per unit – Variable cost per unit
Total contribution
Contribution per unit x Number of units sold
Variance
Actual – Budget
Productivity (labour)
Output per period (units)/ Number of employees in that period
PED
% change in QD / % change in price
YED
% change in quantity demanded / % change in income
Percentage change
(Difference (between two numbers) / the original number ) x 100 e.g 5 to 7 —> 2/5 = 0.4 = 40%
Gearing
(Long-term liabiltes / capital employed) x 100
ROCE
(Operating profit / capital employed ) x 100