Equations

Question 1

YED =

Answer 1

% Δ in quantity demanded
—————————————
% Δ in income

Question 2

PED =

Answer 2

% Δ in quantity demanded
——————————————
% Δ in price

Question 3

EV (Variation) =

Answer 3

Final Payoff x Probability

Question 4

EV (Course of action)

Answer 4

EV1 + EV2 etc

Question 5

Net Gain =

Answer 5

EV (course of action) - Cost (course of action)

Question 6

Market Growth =

Answer 6

Market size (new) - Market size (old)
———————————————————    x 100
             Market size (old)

Question 7

Sales Growth =

Answer 7

Sales (new) - Sales (old)
—————————————— x 100
Sales (old)

Question 8

Market Share =

Answer 8

Business Sales
———————— x 100
Market Size

Question 9

Average Unit Cost

Answer 9

Total Costs
——————
Units Sold

Question 10

Labour Productivity =

Answer 10

Output ÷ Employees

Question 11

Capital Productivity =

Answer 11

Revenue ÷ Non-current assets

Question 12

Capacity Utilisation =

Answer 12

Actual Output
——————— x 100
Max Output

Question 13

Gross Profit Margin =

Answer 13

Gross Profit
—————— x 100
Revenue

Question 14

Operating Profit Margin =

Answer 14

Operating Profit
———————— x 100
Revenue

Question 15

Added Value =

Answer 15

Sales Revenue - Cost of brought in goods/services

Question 16

Return on capital employed (% ROCE) =

Answer 16

Operating Profit
————————————————— x 100
Total equity + Non-current liabilities

Question 17

Current Ratio =

Answer 17

Current Liabilities

Question 18

Gearing (%) =

Answer 18

Non-current liabilities
——————————– x 100
Capital employed

Question 19

Payables days =

Answer 19

Payables
—————– x 365
Cost of sales

Question 20

Receivables Days =

Answer 20

Receivables
——————- x 365
Revenue

Question 21

Inventory Turnover =

Answer 21

Avg inventories held

Question 22

Labour Turnover =

Answer 22

Number of staff leaving
————————————- x 100
Number of staff employed

Question 23

Retention rate =

Answer 23

Number of employees remained for whole period
————————————————————————- x100
Number of employees at start of period

Question 24

Employee costs as a % of turnover =

Answer 24

Employee costs
————————– x 100
Turnover/Revenue

Question 25

Labour cost per unit =

Answer 25

Labour costs --------------------- Units of output

Question 26

Market cap =

Answer 26

Number of ordinary issued shares x price of 1 share (current market price)

Question 27

Ordinary share capital =

Answer 27

Number of ordinary issued shares x price of 1 share at first issue

Question 28

Return on investment =

Answer 28

Profit/Return from investment -------------------------------------------- x 100 Cost of investment

Question 29

Profit for the year margin =

Answer 29

Profit for the year -------------------------- x 100 Revenue

Question 30

Gross profit =

Answer 30

Revenue - cost of sales

Question 31

Operating profit =

Answer 31

Gross profit - operating expenses

Question 32

Profit for the year =

Answer 32

Operating profit + profit from other activities - net finance costs - tax

Question 33

Break-even output =

Answer 33

Fixed costs ------------------------------ x 100 Contribution per unit

Question 34

Contribution per unit =

Answer 34

selling price - variable cost per unit

Question 35

Total contribution =

Answer 35

Total revenue - total variable costs

Question 36

Margin of safety =

Answer 36

Actual level of output - break-even output

Question 37

Working capital =

Answer 37

cash + stock + debtors - creditors

Question 38

Average rate of return (ARR) =

Answer 38

Average Net Return ----------------------------- x 100 Investment

Question 39

Payback period =

Answer 39

Amount invested / annual net return

Question 40

Formula for discount factor (basically just compound)

Answer 40

(1 / 1 + interest rate) ^how many years

Question 41

Return =

Answer 41

Net Present Value ______________ x 100 Investment

Question 42

Net present value =

Answer 42

Total - investment

Question 43

Capital Employed =

Answer 43

Total equity + non-current liabilities

Question 44

Total equity =

Answer 44

Total assets - Total liabilities