Equations

Question 1

Total costs

Answer 1

Fixed costs + Variable costs

Question 2

Profit

Answer 2

Total revenue - Total costs

Question 3

Sales revenue

Answer 3

Selling price per unit × Number of units sold

Question 4

Market capitalisation of a business

Answer 4

Number of issued shares × Current share price

Question 5

Expected value

Answer 5

Financial outcome X Probability + Results

Question 6

Net gain (Decision tree)

Answer 6

Expected value - Initial cost of decision

Question 7

Market growth (%)

Answer 7

Change in size of market between year(x-1) and year(x) / Size of market in year(x-1) X 100

Question 8

Sales growth (%)

Answer 8

Change in sales of product or business between year(x-1) and year(x) / Sales of product or business in year(x-1) X 100

Question 9

Market share (%)

Answer 9

Sales of one product, brand or business / Total sales in market X 100

Question 10

PED

Answer 10

Percentage change in quantity demand / Percentage change in price

Question 11

Added value

Answer 11

Sales revenue - Costs of goods and services

Question 12

Labour productivity

Answer 12

Output per time period / Number of employees

Question 13

Capacity utilisation (%)

Answer 13

Actual output in given time / Maximum possible output in given time X 100

Question 14

ROI (%)

Answer 14

Return on investment / Cost of investment X 100

Question 15

Gross profit

Answer 15

Sales revenue - Cost of sales

Question 16

Operating profit

Answer 16

Sales revenue - Cost of sales - Operating expenses

Question 17

Gross profit margin (%)

Answer 17

Gross profit / Sales revenue X 100

Question 18

Operating profit margin (%)

Answer 18

Operating profit / Sales revenue X 100

Question 19

Profit for the year

Answer 19

Operating profit + Profit from other activities - Net finance costs - Tax

Question 20

Profit for the year margin (%)

Answer 20

Profit for the year / Sales revenue X 100

Question 21

Contribution per unit

Answer 21

Selling price - Variable cost per unit

Question 22

Total contribution

Answer 22

1. Contribution per unit X Units produced or sold
2. Total revenue - Total variable costs

Question 23

Margin of safety

Answer 23

Actual level of output - Breakeven level of output

Question 24

Profit for the year margin (%)

Answer 24

Profit for the year / Sales revenue X 100

Question 25

Labour turnover (%)

Answer 25

Number of staff leaving during year / Average number of staff employed during year X 100

Question 26

Employee retention rate (%)

Answer 26

Number of employees at end of period - Number of leavers / Number of employees at end of period X 100

Question 27

Employee costs as percentage of turnover (%)

Answer 27

Employee costs / Sales turnover X 100

Question 28

Labour cost per unit

Answer 28

Labour costs / Units of output

Question 29

ROCE (%)

Answer 29

Operating profit / Total equity + Non current liabilities X 100

Question 30

Current ratio

Answer 30

Current assets / Current liabilities

Question 31

Gearing (%)

Answer 31

Non current liabilities / Total equity + Non current liabilities X 100

Question 32

Payables days

Answer 32

Payables / Cost of sales X 365

Question 33

Receivables days

Answer 33

Receivables / Sales revenue X 365

Question 34

Inventory turnover

Answer 34

Cost of goods sold / Average inventories held

Question 35

ARR (%)

Answer 35

Net return from project or number of years / initial cost of project X 100

Question 36

Total variable costs

Answer 36

Variable cost per unit × Number of units sold

Question 37

Market size volume

Answer 37

Quantity of goods and services produced in market over time period

Question 38

Market size value

Answer 38

Total sales revenue generated from selling all of goods and services in a market over time period

Question 39

Sales volume

Answer 39

Quantity of goods and services produced by business over time period

Question 40

Sales value

Answer 40

Total sales revenue of business in time period

Question 41

Unit costs

Answer 41

Total cost of production / Number of units of output produced

Question 42

Variance

Answer 42

Difference between actual and budgeted figure. Favourable variance - profits higher than forecast Adverse variance - profits lower than forecast

Question 43

Break-even

Answer 43

Fixed costs / Contribution per unit

Question 44

Break-even point on chart

Answer 44

Total revenue = Total costs

Question 45

Break-even chart profit point

Answer 45

Vertical distance between Total revenue and Total cost