Equations

Question 1

Total costs

Answer 1

Total cost = fixed cost + variable costs

Question 2

Total variable costs

Answer 2

Total variable costs = variable cost per unit x number of units sold

Question 3

Revenue

Answer 3

Revenue = price x quantity sold

Question 4

Market capitalisation

Answer 4

Market capitalisation = number of issues shared x current share price

Question 5

Expected value

Answer 5

Expected value = probability of outcome x expected pay off

Question 6

Market growth

Answer 6

Marker growth = (new market size - old market size / old market size) x 100

Question 7

Market share

Answer 7

Market share = (sales / total market size ) x 100

Question 8

Sales growth (%)

Answer 8

Sales growth (%) = (sales this year - sales last year / sales last year) x 100

Question 9

Price elasticity of demand

Answer 9

Price elasticity of demand = % change in quantity demanded / % change in price

Question 10

Income elasticity of demand

Answer 10

Income elasticity of demand = % change in quantity demanded / % change in income

Question 11

Added value

Answer 11

Added value = sales revenue - cost of bought in services or good

Question 12

Capacity utilisation (%)

Answer 12

Capacity utilisation (%) = (output / capacity) x 100

Question 13

Labour productivity

Answer 13

Labour productivity = output per period / number of employees

Question 14

Unit costs

Answer 14

Unit costs = total costs / total units

Question 15

Re-order level

Answer 15

Re-order level = lead times (days) x average daily use + buffer stock level

Question 17

Profit for the year

Answer 17

Profit for the year = operating profit + other profit - net finance costs - tax

Question 18

Profit for the year margin (%)

Answer 18

Profit for the year margin (%) = profit for the year / sales revenue

Question 19

Return on investment (%) =

Answer 19

Return on investment (%) =
Return on investment (£) / cost of investment (£) x 100
OR
Financial gain from investment - cost of investment (£)

Question 20

Percentage change in profits (%)

Answer 20

Percentage change in profits (%) = (current year profit - previous year profit / previous year profit) x100

Question 21

Gross profit

Answer 21

Gross profit = revenue - cost of sales

Question 22

Gross profit margin (%)

Answer 22

Gross profit margin (%) = (gross profit/ revenue) x 100

Question 23

Operating profit

Answer 23

Operating profit = revenue - cost of sales - operating expenses

Question 24

Operating profit margin (%)

Answer 24

Operating profit margin (%) = (operating profit/ sales revenue ) x 100

Question 25

Contribution per unit

Answer 25

Contribution per unit = selling price per unit - variable costs per unit

Question 26

Total contribution

Answer 26

Total contribution = Total revenue - total variable costs OR Contribution per unit x number of units sold

Question 27

Break even output

Answer 27

Break even output = Fixed costs / contribution per unit

Question 28

Margin of safety

Answer 28

Margin of safety = actual output - break even output

Question 29

Labour turnover

Answer 29

Labour turnover = number of employees leaving during a period / average number employed during a period

Question 30

Labour productivity

Answer 30

Labour productivity = output per period (units) / number of employees

Question 31

Absenteeism

Answer 31

Absenteeism = (Number of staff absent during a period / number employed during a period) x 100 OR (Number of days taken off unauthorised in a period / total days worked by staff over a period) x 100

Question 32

Labour costs per unit

Answer 32

Labour costs per unit = labour costs / units of output

Question 33

Employee costs as a % of turnover

Answer 33

Employee costs as a % of turnover = (employee costs / sales turnover) x 100

Question 34

Labour retention %

Answer 34

Labour retention % = (staff employed currently - number of leavers / number of staff employed at the start of period) x 100