Business Formulas
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- Created by: Beanie10
- Created on: 12-10-19 14:06
Revenue
selling price per unit x number of units sold
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Total variable costs
variable costs per unit x number of units sold
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Total costs
fixed costs + variable costs
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Profit formulas
- total revenue - total costs or -total contribution - fixed costs
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Market capitalisation of a business
number of issues x current share prices
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expected value of a decision with 2 possible outcomes
[pay-off of A x probability of A] + [pay-off of B x probability of B]
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Net gain
expected value - initial cost of decision
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Market growth (%)
change i the size of a market over a period / original size of the market 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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Added value
sales revenue - costs of bought- in goods and services
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Labour productivity
output over a time period / number of employees
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Unit costs
total costs / number of units of output
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Capacity utilisation (%)
actual output / maximum possible output x 100
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Return on investment (%)
profit from the investment (£) / cost of the investment (£) x100
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Gross profit
revenue - cost of sales
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Operating profit
Gross profit - operating expenses
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Gross profit margin (%)
gross profit/ revenue x 100
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Operating profit margin (%)
operating profit / revenue x 100
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Profit for the year margin (%)
profit for the year / revenue x 100
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Variance
budgeted figure - actual figure
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Contribution per unit
selling price - variable costs per unit
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Total contribution formulas
-contribution per unit x units sold or -total revenue - total variable costs
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Break-even output
fixed costs / contribution per unit
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Margin of safety
actual level of output - break-even level of output
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Labour turnover (%)
number of staff leaving / number of staff employed by the business x 100
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\employee retention rate (%) for a particular time period
number of employees who remained with the business for the whole period of time / number of employees at start of the time period x 100
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Employee costs as percentage of turnover
employee costs / 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
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Capital employed
total equity + non-current liabilities
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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
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Payables days
payables / cost of sales x 365
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Receivables days
receivables / revenue x 365
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Inventory turnover
cost of sales / average inventories held
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Average rate of return (%)
average annual return (£) / initial cost of project (£) x 100
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Average rate of return (%)
average annual return (£) / initial cost of project (£) x 100
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Other cards in this set
Card 2
Front
Total variable costs
Back
variable costs per unit x number of units sold
Card 3
Front
Total costs
Back
Card 4
Front
Profit formulas
Back
Card 5
Front
Market capitalisation of a business
Back
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