# A-Level Business Formula and Key Data

Total costs
Fixed costs + Variable costs
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Profit
Total revenue - Total costs OR Total contribution - Fixed costs
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Variable costs (Total variable costs)
Variable cost per unit × Number of units sold
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Total revenue (Sales revenue or Turnover)
Selling price per unit × Number of units sold
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Number of issued shares × Current share price
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Expected value of a decision with two possible outcomes - A&B
(Pay-off of A × probability of A) + (Pay-off of B × probability of B) N.B. Probability of A + Probability of B = 1.0
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In a decision tree Net gain
Expected value - Initial cost of decision
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Market size (volume)
The quantity of goods and services produced in a particular market over a period of time (usually one year)
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Market size (value)
The total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time (usually one year)
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Sales volume
The quantity of goods and services produced by a particular business over a period of time (usually one year).
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Sales value
The total sales revenue of a particular business over a period of time (usually one year)
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Market growth % in year 'X'
Change in the size of the market between year (X-1) and year X / Size of the market in year (X-1) X 100
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Sales growth % in year 'X'
Change in sales of product or business between year (X-1) and year X / Sales of product or business in year (X-1) X 100
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Market share %
Sales of one product OR brand OR business / Total sales in the market X 100
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Price elasticity of demand
Percentage change in quantity demand / Percentage change price
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Sales revenue-costs of bought-in goods and services
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Labour productivity
Output per time period / Number of employees
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Unit costs (average costs)
Total costs of production / Number of units of output produced
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Capacity utilisation (%)
Actual output in a given time period / Maximum possible output in a given time period X 100
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Return on investment (%)
Return on investment (£) / Cost of the investment (£) X 100
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Gross Profit
Sales Revenue - Cost of Sales
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Operating profit (Profit from Operations)
Sales Revenue - Cost of Sales - Operating Expenses
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Profit for year
Operating profit + Profit from other activities - Net finance costs -Tax
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Variance
The difference between an actual and a budgeted figure. Favourable variance results in profits being higher than forecast. Adverse variance results in profits being lower than forecast
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Contribution per unit
Selling price - Variable costs per unit
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Total contribution
Contribution per unit × Units produced or sold OR Total revenue - Total variable costs
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Break-even output
Fixed costs / Contribution per unit
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On a break-even chart the break-even output is...
The level of output at which Total Revenue equals Total Costs
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On a break-even chart the level of profit at a given level of output is...
The vertical distance between the Total Revenue line and the Total Cost line
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Margin of safety
Actual level of output - Breakeven level of output
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Gross profit margin (%)
Gross profit / Sales revenue X 100
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Operating profit margin (%) (Profit from operations margin)
Operating profit / Sales revenue X 100
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Profit for year margin (%)
Profit for year / Sales revenue X 100
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Labour turnover (%)
Number of staff leaving during the year / Average number of staff employed by the business during the year X 100
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Employee retention rate (%) for a particular time period
Number of employees at end of period-number of leavers / Number of employees at end of period X 100
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Employee costs as percentage of turnover
Employee costs / Sales turnover X 100
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Labour cost per unit
Labour costs / Units of output
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Return on capital employed (ROCE) (%)
Operating profit / Total Equity + non-current liabilities X 100 (Where total equity + non-current liabilities = capital employed)
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Current ratio
Current assets / Current liabilities
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Gearing (%)
Non-current liabilities / Total equity + non-current liabilities X 100 (Where total equity plus non-current liabilities = capital employed)
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Payables days
Payables / Cost of sales X 365 (Where payables = creditors)
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Receivables days
Receivables / Sales revenue X 365 (Where receivables = debtors)
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Inventory turnover
Cost of goods sold / Average inventories held
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Average rate of return (%)
Net return from project (£) or number of years / Initial cost of project (£) X 100
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## Other cards in this set

### Card 2

#### Front

Total revenue - Total costs OR Total contribution - Fixed costs

Profit

### Card 3

#### Front

Variable cost per unit × Number of units sold

#### Back ### Card 4

#### Front

Selling price per unit × Number of units sold

#### Back ### Card 5

#### Front

Number of issued shares × Current share price

#### Back 