Formulae and key data 0.0 / 5 ? Business StudiesFormulaeA2/A-levelAQA Created by: charliedeeCreated on: 20-04-16 19:57 Give the formula for total costs Total costs = Fixed costs + Variable costs 1 of 44 Give the formula for profit (NOT USING CONTRIBUTION) Total revenue - Total costs 2 of 44 Give the formula for profit using contribution Total contribution - Fixed costs 3 of 44 Give the formula for total revenue Selling price per unit x No. units sold 4 of 44 How do you work out the market capitalisation of a business? No. of issued shares x Current share price 5 of 44 Formula to work out net gain from a decision tree Expected value - Initial cost of decision 6 of 44 What is market size in terms of volume? The quantity of goods and services produced in a particular market over a period of time 7 of 44 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 8 of 44 What is sales volume? The total sales revenue produced by a particular business over a period of time 9 of 44 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 10 of 44 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 11 of 44 Formula to work out % market share Sales of product OR brand Or business / total sales of the market x 100 12 of 44 How do you work out price elasticity of demand? % change in quantity demand / % change price 13 of 44 To be price inelastic what range does the coefficient have to be in? 0 to -1 14 of 44 To be price elastic what range does the coefficient have to be in? -1 to -infinity 15 of 44 Formula for added value Sales revenue - costs of bought in goods and services 16 of 44 Formula for labour productivity Output per time period / no. of employees 17 of 44 How do you work out unit costs? Total costs of production / no. of units of output produced 18 of 44 Formula for % capacity utilisation Actual output in a given time period / maximum possible output in a given time x 100 19 of 44 Formula for % return on investment Return on investment (£) / cost of the investment (£) x 100 20 of 44 Formula for gross profit Sales revenue - cost of sales 21 of 44 How do you work out profit from operations (operating profit)? Gross profit - operating expenses 22 of 44 Formula to work out profit for the year Operating profit + profit from other activities - net finance costs - tax 23 of 44 What is variance? The difference between an actual and budgeted figure 24 of 44 What is favourable variance for profit? Profits being higher than forecast 25 of 44 What is adverse variance for profit? Profits being lower than forecast 26 of 44 Formula for contribution per unit Selling price - variable costs per unit 27 of 44 How do you work out total contribution? Contribution per unit x units produced or sold OR total revenue - total variable costs 28 of 44 How do you work out break-even output? Fixed costs / contribution per unit 29 of 44 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 30 of 44 How do you work out margin of safety? Actual level of output - breakeven level of output 31 of 44 Formula to work out % gross profit margin Gross profit / sales revenue x 100 32 of 44 How do you work out the operating profit margin (%)? Operating profit / sales revenue x 100 33 of 44 Formula to work out profit for year margin (%)? Profit for year / sales revenue x 100 34 of 44 How do you work out labour turnover? No. staff leaving during year / average no. staff employed during year x 100 35 of 44 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 36 of 44 Formula for labour cost per unit Labour costs / units of output 37 of 44 How do you work out return on capital employed (ROCE) as a %? operating profit / (total equity + non-current liabilities) x 100 38 of 44 Formula for current ratio Current assets / current liabilities 39 of 44 Formula for gearing (%) Non-current liabilities / (total equity + non-current liabilities) x 100 40 of 44 Where payables = creditors, what is the formula for payables days? Receivables / sales revenue x 365 41 of 44 Where receivables = debtors, what is the formula for receivables days? Receivables / sales revenue x 365 42 of 44 Formula for inventory turnover Cost of goods sold / average inventories held 43 of 44 Formula for rate of return (%) (Net return from project (£) / no. years) / initial cost of project (£) x 100 44 of 44
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