# Formulae and key data

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Give the formula for total costs
Total costs = Fixed costs + Variable costs
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Give the formula for profit (NOT USING CONTRIBUTION)
Total revenue - Total costs
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Give the formula for profit using contribution
Total contribution - Fixed costs
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Give the formula for total revenue
Selling price per unit x No. units sold
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How do you work out the market capitalisation of a business?
No. of issued shares x Current share price
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Formula to work out net gain from a decision tree
Expected value - Initial cost of decision
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What is market size in terms of volume?
The quantity of goods and services produced in a particular market over a period of time
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What is market size in terms of value?
The total sales revenue generated from selling all of the goods and services produced by a particular market over a period of time
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What is sales volume?
The total sales revenue produced by a particular business over a period of time
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Formula to work out % market growth in a year?
Change in size of the market between year (X-1) and year X / size of market in year (X-1) x 100
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How do you work out % sales growth in a year?
Change in sales between year (X-1) and year X / sales of product in year (X-1) x 100
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Formula to work out % market share
Sales of product OR brand Or business / total sales of the market x 100
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How do you work out price elasticity of demand?
% change in quantity demand / % change price
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To be price inelastic what range does the coefficient have to be in?
0 to -1
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To be price elastic what range does the coefficient have to be in?
-1 to -infinity
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Formula for added value
Sales revenue - costs of bought in goods and services
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Formula for labour productivity
Output per time period / no. of employees
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How do you work out unit costs?
Total costs of production / no. of units of output produced
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Formula for % capacity utilisation
Actual output in a given time period / maximum possible output in a given time x 100
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Formula for % return on investment
Return on investment (£) / cost of the investment (£) x 100
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Formula for gross profit
Sales revenue - cost of sales
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How do you work out profit from operations (operating profit)?
Gross profit - operating expenses
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Formula to work out profit for the year
Operating profit + profit from other activities - net finance costs - tax
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What is variance?
The difference between an actual and budgeted figure
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What is favourable variance for profit?
Profits being higher than forecast
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What is adverse variance for profit?
Profits being lower than forecast
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Formula for contribution per unit
Selling price - variable costs per unit
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How do you work out total contribution?
Contribution per unit x units produced or sold OR total revenue - total variable costs
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How do you work out break-even output?
Fixed costs / contribution per unit
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On a break-even chart how do you find the break-even point?
The point at which the total revenue line and the total cost line meet
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How do you work out margin of safety?
Actual level of output - breakeven level of output
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Formula to work out % gross profit margin
Gross profit / sales revenue x 100
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How do you work out the operating profit margin (%)?
Operating profit / sales revenue x 100
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Formula to work out profit for year margin (%)?
Profit for year / sales revenue x 100
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How do you work out labour turnover?
No. staff leaving during year / average no. staff employed during year x 100
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Formula for employee retention rate (%) for a particular time period
(No. employees at end of period - number of leavers) / no. employees at end of period x 100
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Formula for labour cost per unit
Labour costs / units of output
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How do you work out return on capital employed (ROCE) as a %?
operating profit / (total equity + non-current liabilities) x 100
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Formula for current ratio
Current assets / current liabilities
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Formula for gearing (%)
Non-current liabilities / (total equity + non-current liabilities) x 100
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Where payables = creditors, what is the formula for payables days?
Receivables / sales revenue x 365
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Where receivables = debtors, what is the formula for receivables days?
Receivables / sales revenue x 365
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Formula for inventory turnover
Cost of goods sold / average inventories held
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Formula for rate of return (%)
(Net return from project (£) / no. years) / initial cost of project (£) x 100
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## Other cards in this set

### Card 2

#### Front

Give the formula for profit (NOT USING CONTRIBUTION)

#### Back

Total revenue - Total costs

### Card 3

#### Front

Give the formula for profit using contribution

### Card 4

#### Front

Give the formula for total revenue

### Card 5

#### Front

How do you work out the market capitalisation of a business?

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