business studies equations

revenue comes from customers, by selling goods or service.

Revenue= selling price x quantity sold

fixed cost are expenses that stay the same even if more is produced. office rent is an example of a fixed cost which remains the same each month even if output rises.

variable cost change with the amount produced. For example, the cost of raw materials rises as more output is made.

Cost= fixed cost - variable cost 

Profit/ Lose =revenue - cost 

The diffrence between sales revenue and the cost of sales.

Gross Profit = revenue - cost of good sold( variable goods)

The diffrence between sales revenue and total cost.

over heads= fixed costs such as, salerry of employments, rent and heating.

Net profit= gross profit - overheads

Net Profit Margin = Net Profit ÷ Revenue (then times by 100 for a percentage %)

Units to sell to reach break even = Fixed Costs/(Unit Selling Price - Variable Costs)

closing balance= opening balance + net cah flow

Opening balence = the closing balence of the previous one.

The exchange rate is the amount of currency which £1 will buy.

Amount in foreign currency = Amount in £ x Exchange rate

Amount in £ = Amount in foreign currency ÷ Exchange rate

ross/ Net profit margin= gross/ net profit  ÷ sale revenue x 100

current assets-- are owen by the business for less that a year. eg raw materials.

current liabilies-- need to be repaid within one year

Net current assets= curent assets  - curent liabilities

Long term liabilities- need to be repaid after one year.

Long term liabilities= (fixed assets + current assets) - ( current liabilities - long term liabilities)