Business Formulas

Answer 1

Total Revenue Selling Price × Quantity Sold
Topic Formula
Total Revenue Selling Price × Quantity Sold
Total Costs Fixed Costs + Variable Costs
Profit Total Revenue – Total Costs
Gross Profit Revenue – Cost of Sales (cost of sales = direct costs e.g., materials)
Gross Profit Margin (%) (Gross Profit ÷ Revenue) × 100
Net Profit Gross Profit – Expenses
Net Profit Margin (%) (Net Profit ÷ Revenue) × 100
Break-even Point (Units) Fixed Costs ÷ (Selling Price – Variable Cost per Unit)
Margin of Safety Actual Sales – Break-even Sales
Average Rate of Return (ARR) (%) (Average Annual Profit ÷ Initial Investment) × 100
Opening Balance Closing Balance of Previous Period
Net Cash Flow Cash Inflows – Cash Outflows
Closing Balance Opening Balance + Net Cash Flow