All Business Equations!

Question 1

What’s the equation for YED??

Answer 1

% change in quantity demanded / % change in income

Question 2

What’s the equation for PED??

Answer 2

% change in quantity demanded / % change in price
(PED is always negative

Question 3

What’s the equation for revenue??

Answer 3

Selling price x no. of units sold

Question 4

What’s the equation for average total cost??

Answer 4

Total cost/quantity

Question 5

What’s the equation for contribution??

Answer 5

Selling price per unit - variable cost per unit

Question 6

What’s the equation for profit??

Answer 6

Total revenue - total cost

Question 7

What’s the equation for gross profit??

Answer 7

GP = Revenue - Variable costs

Question 8

What’s the equation for Gross profit margin??

Answer 8

(GP/Revenue) x 100

Question 9

What’s the equation for Operating Profit??

Answer 9

OP = Gross profit - Fixed Costs

Question 10

What’s the equation for Operating Profit margin??

Answer 10

(OP/Revenue) x 100

Question 11

What’s the equation for net profit (profit for the year)?

Answer 11

Operating profit - interest

Question 12

What’s the equation for the current ratio??

Answer 12

Current assets/ current liabilities

Question 13

What’s the equation for the acid ratio??

Answer 13

(current assets - inventory)/current liabilities

Question 14

What is the equation for working capital??

Answer 14

Current assets - current liabilities

Question 15

What is the equation for the Average Rate of Return??

Answer 15

(Actual sales - B/E)/Actual sales

Question 16

What is the equation for B/E??

Answer 16

Fixed costs/contribution

Question 17

What’s the equation for margin of safety??

Answer 17

Average net profit/cost of investment x 100