Theme 2 Formulas

Question 1

Net cash flow

Answer 1

= Total inflows - total outflows

Question 2

Sales volume

Answer 2

= total number of units sold over a period of time

Question 3

Sales revenue

Answer 3

= Number of units x selling price per unit

Question 4

Total variable costs

Answer 4

= number of units sold x variable cost per unit

Question 5

Total costs

Answer 5

= fixed costs + variable costs

Question 6

Contribution per unit

Answer 6

= selling price per unit - variable cost per unit

Question 7

Total contribution

Answer 7

= Contribution per unit x number of units sold

Question 8

Break-even

Answer 8

= fixed costs / contribution per unit

Question 9

Budget variance

Answer 9

= actual - budget

Question 10

Gross profit

Answer 10

= sales revenue - cost of sales

Question 11

Operating profit

Answer 11

= Gross profit - overheads (costs)

Question 12

Net profit

Answer 12

= Operating profit - interest and taxation

Question 13

Net profit margin

Answer 13

= (Profit for the year / sales revenue) x100

Question 14

Current ratio

Answer 14

= Current assets / current liabilities

Question 15

Acid test ratio

Answer 15

= (Current assets - stock) / current liabilities

Question 16

Productivity

Answer 16

= Output per period / Number of employees in that period

Question 17

Capacity utilisation

Answer 17

= (Actual level of output / Maximum possible output) x100

Question 18

Gross profit margin

Answer 18

= (gross profit / sales revenue) x100

Question 19

Operating profit margin

Answer 19

= (operating profit / sales revenue) x100

Question 20

Labour productivity

Answer 20

= output (per time period)/no. of employees (during time period) x100