Themes 1 2 3 and 4

Question 1

formula for market share

Answer 1

sales of the business / total sales in the market X100

Question 2

formula for capacity utilisation

Answer 2

existing output / maximum possible output X100

Question 3

Formula for break even

Answer 3

fixed costs / contribution per unit

Question 4

formula for contribution

Answer 4

selling price - variable costs

Question 5

formula for total contribution

Answer 5

Total output x contribution per unit

Question 6

formula for profit

Answer 6

Margin of safety x contribution per unit

Question 7

Formula for margin of safety

Answer 7

current level of output - break even point

Question 8

Formula for payback if falls in between 2 years

Answer 8

amount remaining to recover / amount recovered following year X12

Question 9

formula for ARR

Answer 9

Average annual profit / assets initial cost X100

Question 10

Three steps to work out ARR

Answer 10

1. Total income from investment-cost of investment = total profit investment
2. total profit from investment , expected lifespan of asset = average annual profit.
3. average annual profit / assets initial cost (cost of in investment) X100 = AR

Question 11

Formula for net present value

Answer 11

net cash flow x discounted factor

Question 12

formula for gearing ratio

Answer 12

Non-currrent liabilities / Total equity + non-current liabilities X100

Question 13

formula for gross profit

Answer 13

revenue - cost of goods sold

Question 14

formula for net profit

Answer 14

Total revenue - total expenses

Question 15

Formula for operating profit margin

Answer 15

operating profit / sales revenue