A Level Finance Formualas

Question 1

Break even

Answer 1

Fixed cost / contribution

Question 2

Margin of safety

Answer 2

Current output - breakeven output

Question 3

Net cash flow

Answer 3

Cash inflow – cash outflow

Question 4

CFF closing balance

Answer 4

Opening balance + net cash flow

Question 5

Cost of sales (cost of goods sold)

Answer 5

Opening Stock + Purchases – Closing Sales

Question 6

Gross profit

Answer 6

Sales Revenue – Cost of Sales

Question 7

Gross profit %

Answer 7

(Gross Profit / Sales revenue) x 100

Question 8

Net profit (income statement)

Answer 8

Gross Profit – Expenses

Question 9

Net profit %

Answer 9

(Net profit / sales revenue) x 100

Question 10

Capacity utilisation

Answer 10

(Actual output / maximum possible output) x 100

Question 11

Labour productivity

Answer 11

output per time period - Number of employees at work

Question 12

Labour productivity

Answer 12

output per time period - Number of employees at work

Question 13

Labour turnover

Answer 13

(Staff leavers per year / average number of staff) x 100

Question 14

Added value

Answer 14

selling price of product – the cost of production

Question 15

Working Capital

Answer 15

Current asset – current liabilities

Question 16

Net Assets

Answer 16

Fixed assets + current assets – current liabilities

Question 17

BS* Net Profit

Answer 17

Capital Employed – Opening Capital + Drawing

Question 18

Capital Employed ( for Sole traders and Partnerships )

Answer 18

Total assets + net profit – drawings

Question 19

Depreciation

Answer 19

(Original Cost - Residual Value) /Expected life (years)

Question 20

Current Ratio

Answer 20

Current assets / current liabilities

Question 21

Acid Test Ratio

Answer 21

(Current assets - stock) / current liabilities

Question 22

Gearing Ratio

Answer 22

(Long term liabilities / capital employed) x100

Question 23

Return on Capital Employed (ROCE)

Answer 23

(Net profit / capital employed) x100

Question 24

Average Annual Profit

Answer 24

Total Profit / Number of years

Question 25

Average Rate of Return

Answer 25

(Average annual profit / initial investment) x100

Question 26

Payback Period with Constant Annual Net Cash Flow

Answer 26

Payback *annual net cash flow is constant

Question 27

Payback

Answer 27

Initial outlay / net cash per time period

Question 28

Net cash flow rule

Answer 28

Annual net cash flow fluctuates

Question 29

Payback

Answer 29

Investment outstanding / Monthly cash in year of payback

Question 30

Calculating % increase change

Answer 30

(New-old) / original x100

Question 31

Calculating % decrease change

Answer 31

(Old-new) / original x100

Question 32

Price of elasticity of demand (PED)

Answer 32

% change in quantity demanded / % change in price

Question 33

Income elasticity of demand (YED)

Answer 33

% change in quantity demanded / % change in income

Question 34

BS* Capital employed (most used)

Answer 34

LTL + shareholder funds

Question 35

Profit margins

Answer 35

(Profit / revenue) x100

Question 36

Break even (with margin of saftey)

Answer 36

Current output - margin of saftey

Question 37

How to calculate payback period

Answer 37

Calculate the cumulative cash flow over the years

Question 38

Payback months

Answer 38

Income needed in period / contribution per month

Question 39

Social Benefit

Answer 39

Private benefit + public benefits (If social benefits are greater than social costs, them go ahead with the proposal)

Question 40

Social cost

Answer 40

Private costs + public costs (If the social costs are greater than social benefits, then do not go ahead with the proposal)