Theme 3 Formula

Question 1

Gearing

Answer 1

(Non current liabilities / capital employed) X 100

Question 2

Return on capital employed

Answer 2

Operating profit / capital employed

Question 3

Capital employed

Answer 3

Non current liabilities + total equity

Question 4

Labour turnover

Answer 4

(Number of staff leaving in a period / Total number of staff employed in the period) X 100

Question 5

Staff absenteeism

Answer 5

(Number of days missed / Total number of days worked by all workers) X 100

Question 6

Labour productivity

Answer 6

(Output / number of employees) X 100

Question 7

Investment appraisal methods

Answer 7

Payback, Average rate of return (ARR), Net present value

Question 8

Payback

Answer 8

Work out how many whole years then do ~ (income required / income generated) X 12

Question 9

Net present value

Answer 9

Net cash flow X discount factor

Then total all discounted cash flows, then subtract the initial cost of investment

Question 10

Net present value formula

Answer 10

Sum of P/(1+i)^t all minus C

Question 11

ARR formula

Answer 11

((Total net profit / number of years) / initial cost) X100