Business Equations Flashcards
Profit
Profit = revenue - costs
Total costs
Total costs = total fixed costs + total variable costs
Revenue
Revenue = price x quantity sold
Break even points in units
Fixed cost / (sales price - variable cost)
Break even point in revenue
Break even point in revenue = break-even point in units x sales price
Margin of safety
Margin of safety = actual output - break even output
Net cash flow
Net cash flow = cash inflows - cash outflows
Gross profit
Gross profit = sales revenue - cost of sales
Gross profit margin (%)
Gross profit margin (%) = gross profit / sales revenue (x100)
Net profit
Net profit = gross profit - expenses
Net profit margin (%)
Net profit margin (%) = net profit / sales revenue (x100)
Current ratio
Current ratio = current assets / current liabilities
Working capital
Working capital = current assets - current liabilities
Acid test ratio
Acid test ratio = (current assets - inventory) / current liabilities
Average cost per unit
Average cost per unit = total costs / total output
