Equations
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- Created by: George Heard
- Created on: 22-03-19 09:37
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 X number of units sold
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Total Revenue =
Selling price per unit X number of units sold
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Market capitalisation of a business =
Number of issued shares X Current share price
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Expected value of a decision =
pic
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In a decision tree Net Gain =
Expected value - initial cost of decision
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What is market size (volume)?
The quantity of goods and services produced in a particular market over a period of time (usually per annum)
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What is sales volume?
The quantity of goods and services produced by a particular business over a period of time (per annum)
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What is sales value?
Sales value is the total sales revenue of a particular business over a period of time (per annum)
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What is 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 (per annum)
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Market growth(%) in current year =
Change in the size of the market between past year and current year/Size of the market in the past year X 100
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Sales growth (%) in current year =
Change in sales of product or business between past year and current year/Sales of product or business in year in the past year 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 of demand / percentage change price
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What are the coefficients of price inelastic demand price elastic demand
inelastic demand = (0) to (-1) elastic demand = (0) to (infinite)
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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 (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 =
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 (1) =
Contribution per unit X Units produced or sold
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Total contribution (2) =
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 what does the break-even output represent
It is the level of output at which Total Revenue equals total costs
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On a break even chart how is the profit shown
It is the level of output and this is the vertical distance between 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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Profit from operations margin or Operating profit 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
Employee costs / Sales turnover X 100
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Labour cost per unit =
Labour costs / units of output
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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 / sales revenue X 100
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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
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
Profit =
Back
Total revenue - total costs OR Total contribution - fixed costs
Card 3
Front
Variable costs(total variable costs) =
Back
Card 4
Front
Total Revenue =
Back
Card 5
Front
Market capitalisation of a business =
Back
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