Business calculations

Total costs
Variable 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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Market capitalisation of a business
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 is...
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 is...
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 is...
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 is...
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) × 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) × 100
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Market share %
Sales of one product OR brand OR business/ Total sales in the market × 100
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Price elasticity of demand
Percentage change in quantity demand/ Percentage change price
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Added value
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
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 × 100
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Return on investment %
Return on investment (£)/ Cost of the investment (£) ×100
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Gross Profit
Sales Revenue - Cost of Sales
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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 × 100
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Profit from operations margin
Operating profit/ Sales revenue × 100
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Profit for year margin %
Profit for year/ Sales revenue × 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 × 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 ×100
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Employee costs as percentage of turnover
Employee costs/ Sales turnover × 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 × 100
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Current ratio
Current assets/ Current liabilities
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Gearing %
Non-current liabilities/ Total equity + non-current liabilities ×100
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Payables days
Payables Cost of sales ×365
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Receivables days
Receivables/ Sales revenue ×365
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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 £ ×100
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Other cards in this set

Card 2

Front

Profit

Back

Total revenue - Total costs OR Total contribution - Fixed costs

Card 3

Front

Variable costs Total variable costs

Back

Preview of the front of card 3

Card 4

Front

Total revenue Sales revenue or Turnover

Back

Preview of the front of card 4

Card 5

Front

Market capitalisation of a business

Back

Preview of the front of card 5
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