Business Formulas

Question 1

PED

Answer 1

% change in Quantity Demanded/% Change in Price

Question 2

YED

Answer 2

% change in Quantity Demanded/% Change in Income

Question 3

Market Share (%)

Answer 3

Business Sales/Market Sales x100

Question 4

Market size

Answer 4

Total value of business sales
(From a %) = Known value/100

Question 5

Market Growth (%)

Answer 5

Difference/Original X100

Question 6

Total Costs (£)

Answer 6

Fixed Costs + Total Variable Costs

Question 7

Total Variable Costs

Answer 7

Variable Cost Per Unit x Number of Units

Question 8

Revenue (£)

Answer 8

Selling Price x Quantity Sold

Question 9

Profit (£)

Answer 9

Revenue - Total Costs

Question 10

Break Even (Units)

Answer 10

Fixed Costs/Contribution

Question 11

Contribution (per unit)

Answer 11

Selling Price per unit - Variable Cost per unit

Question 12

Total Contribution

Answer 12

Total Revenue - Total Variable Costs

OR

Contribution per unit x Number of Units

Question 13

Margin of Safety

Answer 13

Actual Level of Output - Break Even Point

Question 14

Net Cash Flow (£)

Answer 14

Inflows - Outflows

Question 15

Budget Variance (£)

Answer 15

Budgeted - Actual

Question 16

Gross Profit (£)

Answer 16

Sales Revenue - Cost of Sales

Question 17

Net Profit (£)

Answer 17

Sales Revenue - Cost of Sales - Expenses

OR

Gross Profit - Expenses

Question 18

Gross Profit Margin

Answer 18

Gross Profit/Revenue
X100

Question 19

Net Profit Margin

Answer 19

Net Profit/Revenue
X100

Question 20

Labour turnover (%)

Answer 20

Number of Leavers/Average Number of Employees
X100

Question 21

Labour productivity

Answer 21

Output per time period/number of employees

Question 22

Added Value (£)

Answer 22

Value of Output - Value (Costs) of Inputs
[Selling price - cost of raw materials]

Question 23

Capacity Utilisation

Answer 23

Actual Output/Maximum Possible Output
X100

Question 24

Lead Time (Time)

Answer 24

Time Difference between re-order quantity and stock increase

Question 25

Re-Order quantity

Answer 25

Increase in stock level when delivery received

Question 26

Moving Average

Answer 26

Previous Month + Current Month + Next Month/3

Question 27

Working Capital

Answer 27

Current Assets - Current Liabilities

Question 28

Capital Employed

Answer 28

Shareholder funds + Non current liabilities

Question 29

Depreciation

Answer 29

Historical Cost - Redsidual Value (resale value)/ Useful life of asset (life span)

Question 30

ROCE

Answer 30

Net Profit before Tax/Shareholder funds + non current liabilities

Question 31

Current Ratio

Answer 31

Current Assets/Current Liabilities

Question 32

Acid Test

Answer 32

Current Assets - Stock/Current Liabilities

Question 33

Gearing

Answer 33

long-term liabilities/capital employed X100

Question 34

Decision Tree: Expected Value

Answer 34

(Each Probability X Each Outcome) Added together

Question 35

Decision Tree: Net Gain

Answer 35

Expected Value – Initial Cost

Question 36

CPA: EST

Answer 36

Previous EST + Previous Activity Duration (Work from left to right) (Choose biggest outcome if more than one route)

Question 37

CPA: LFT

Answer 37

Previous LFT – Following Activity Duration (Work from right to left) (Choose smallest outcome if more than one route)

Question 38

CPA: FLOAT

Answer 38

LFT – Duration -EST

Question 39

Payback

Answer 39

(Number of Full years) & Amount needed in final year/Amount getting in final year X (12Months)

Question 40

Average Rate of Return

Answer 40

Average Annual Profit/COST OF INVESTMENT x100

Question 41

Net Present Value

Answer 41

1. Multiply each year’s income by its discount rate 2. Add them together 3. Deduct initial cost

Question 42

Contribution (Special Orders)

Answer 42

Selling Price Per Unit – Variable Cost Per Unit = Contribution Per Unit Contribution Per Unit x Units Sold = Total Contribution