Formulae - Business Finance
- Created by: Howwise
- Created on: 16-11-21 13:10
View mindmap
- Business Finance Formulae
- Cash flow
- Net cash flow = Total Cash Inflow – Total Cash Outflow
- Closing balance Opening balance + Net Cash Flow
- Break Even Analysis
- Total contribution = Sales Revenue - Total Variable Costs
- Contribution (per unit) = Selling Price – Variable Cost (per unit)
- Profit (using contribution) = Contribution per unit x margin of safety
- Break-even output = Total Fixed Costs / Unit Contribution
- Margin of Safety = Actual Sales – Break-even level of output
- Statement of Comprehensive Income
- Revenue = Unit price x Quantity sold
- Gross Profit = Revenue – Cost of Goods Sold
- Cost of goods sold = Opening Inventory + Purchases – Closing Inventory
- Profit/loss for the year = Gross Profit – expenses + other income
- Total costs = Fixed costs + Total Variable costs
- Depreciation
- Net book value = Cost - Depreciation
- Reducing Balancing Method = Net book value - depreciation %
- Straight Line Method = Initial value of the asset - Estimated residual value / Expected life of the asset
- Statement of Financial Position
- Net book value = Cost - Depreciation
- Net current assets = Current Assets - Current Liabilities
- Net assets = Non-current assets + Net current assets - Long term liabilities
- Capital employed = Opening Capital + Profit for the Year less drawings
- Profitability Ratio
- Gross Profit Margin = Gross profit / Revenue x 100
- Mark up Ratio = Gross profit / Cost of goods sold x 100
- Net Profit Margin = net profit / Revenue × 100
- Return on Capital Employed = net profit before interest and tax / capital employed × 100
- Liquidity Ratios
- Current Ratio = current assets / current liabilities
- Liquid Capital ratio = Current assets + inventory / current liabilities
- Efficiency Ratio
- Trade receivable days = ( trade receivables / credit sales) X 365
- Trade payable days = (trade payables/ credit purchases) x 365
- Inventory turnover = (average inventory/cost of sales) x 365Average inventory is calculated as follows: (opening inventory + closing inventory)/2
- Cash flow
Comments
No comments have yet been made