# Formulas

Total costs
Fixed costs + Variable costs
1 of 39
Profit
Total revenue - Total costs OR Total contribution - Fixed costs
2 of 39
Variable costs (Total variable costs)
Variable cost per unit x Number of units sold
3 of 39
Total revenue (Sales revenue or Turnover)
Selling price per unit x Number of units sold
4 of 39
Number of issued shares x Current share price
5 of 39
Expected value of a decision with two possible outcomes - A and B
(Pay off of A x Probability of A) + (Pay off of B x Probability of B) N.B. Probability of A + Probability of B = 1.0
6 of 39
In a decision tree net gain
Expected value - Initial cost of decision
7 of 39
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) x 100
8 of 39
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) x 100
9 of 39
Market share %
Sales of one product OR brand OR business/Total sales in the market x 100
10 of 39
Price elasticity of demand
Percentage change in quantity demand/Percentage change price x 100
11 of 39
Sales revenue - costs of bought in goods and services
12 of 39
Labour productivity
Output per time period/Number of employees
13 of 39
Unit costs (average costs)
Total costs of production/Number of units of output produced
14 of 39
Capacity utilisation (%)
Actual output in a given time period/Maximum possible output in a given time period x 100
15 of 39
Return on investment (%)
Return on investment (£)/Cost of the investment (£) x 100
16 of 39
Gross profit
Sales revenue - Cost of sales
17 of 39
Operating profit
Sales revenue - Cost of sales - Operating expenses
18 of 39
Profit for year
Operating profit + Profit from other activities - Net finance costs - Tax
19 of 39
Contribution per unit
Selling price - Variable costs per unit
20 of 39
Total contribution (1)
Contribution per unit x Units produced or sold
21 of 39
Total contribution (2)
Total revenue - Total variable costs
22 of 39
Break even output
Fixed costs/Contribution per unit
23 of 39
Margin of safety
Actual level of output - Break even level of output
24 of 39
Gross profit margin (%)
Gross profit/Sales revenue x 100
25 of 39
Profit from operations margin
Operating profit margin (%) =Operating profit/Sales revenue x 100
26 of 39
Profit for year margin (%)
Profit for year/Sales revenue x 100
27 of 39
Labour turnover (%)
Number of staff leaving during the year/Average number of staff employed by the business during the year x 100
28 of 39
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
29 of 39
Labour cost per unit
Labour costs/Units of output
30 of 39
Return on capital employed (%)
Operating profit/Total equity plus non-current liabilities x 100
31 of 39
Capital employed
Total equity + non-current liabilities
32 of 39
Current ratio
Current assets/Current liabilities
33 of 39
Gearing (%)
Non-current liabilities/Total equity + Non-current liabilities x 100
34 of 39
Payables days
Payables/Cost of sales x 365
35 of 39
Receivables days
Receivables/Sales revenue x 365
36 of 39
Inventory turnover
Cost of goods sold/Average inventories held
37 of 39
Average rate of return (%)
Net return from project (£)/Number of years/Initial cost of project (£) x 100
38 of 39
Net from return from project
Total income from project over its lifetime - Total costs of project over its lifetime, including the initial cost of the project
39 of 39

## Other cards in this set

### Card 2

Profit

#### Back

Total revenue - Total costs OR Total contribution - Fixed costs

### Card 3

#### Front

Variable costs (Total variable costs)

### Card 4

#### Front

Total revenue (Sales revenue or Turnover)