Equations

Question 1

total costs

Answer 1

fixed costs + variable costs

Question 2

profit

Answer 2

total revenue - total costs OR total contribution - fixed costs

Question 3

variable costs

Answer 3

variable cost per unit x number of units sold

Question 4

total revenue

Answer 4

selling price per unit x number of units sold

Question 5

market capitalisation

Answer 5

number of issues shares x current share price

Question 6

expected value

Answer 6

A & B (payoff A x profitability of A) + (pay off B x probability of B)

Question 7

net gain

Answer 7

expected value - initial cost of decision

Question 8

market size(volume)

Answer 8

quantity of goods and services produced in a particular market

Question 9

sales volume

Answer 9

quantity of goods and services produced

Question 10

sales value

Answer 10

total sales revenue of a business

Question 11

market growth %

Answer 11

change in the size of the market between (X-1) and year X / size of the market in year (X-1) x 100

Question 12

sales growth %

Answer 12

change in sales of product between year (X-1) and year X / sales of product (X-1) x100

Question 13

market share %

Answer 13

sales of one product / total sales in the market x100

Question 14

price elasticity of demand

Answer 14

percentage change in quantity demand / percentage change price

Question 15

added value

Answer 15

sales revenue - costs of bought in goods and services

Question 16

market size (value)

Answer 16

total sales revenue generated from selling all the goods and services produced in a particular market

Question 17

labour productivity

Answer 17

output per time period / number of employees

Question 18

unit costs

Answer 18

total costs of production / number of units of output produced

Question 19

capacity utilisation %

Answer 19

actual output / maximum output x100

Question 20

return on the investment

Answer 20

return on investment / cost of investment x100

Question 21

gross profit

Answer 21

sales revenue - cost of sales

Question 22

operating profit

Answer 22

gross profit - operating expenses

Question 23

profit of the year

Answer 23

operating profit + other profit - net finance - tax

Question 24

variance

Answer 24

the difference between an actual and a budgeted figureq

Question 25

contribution per unit

Answer 25

selling price - variable costs per unit

Question 26

total contribution

Answer 26

contribution per unit x units produced OR total revenue - total variable costs

Question 27

break even output

Answer 27

fixed costs / contribution per unit

Question 28

where is the break even output on a break even chart

Answer 28

total revenue = total costs

Question 29

where is the level of profit on a break event chart

Answer 29

total revenue line and the total costs line

Question 30

margin of safety

Answer 30

actual level of output - breakeven level of output

Question 31

gross profit margin %

Answer 31

gross profit / sales rev x100

Question 32

operating profit margin &

Answer 32

operating profit / sales rev x100

Question 33

profit of the year margin %

Answer 33

profit of the year / sale rev x100

Question 34

labour turnover %

Answer 34

number of staff leaving during the year / average number of staff employed by the business x100

Question 35

retention rate %

Answer 35

number of employees at the end of period - number of leavers / number of employees at the end x100

Question 36

employee costs as % of turnover

Answer 36

employee costs / sales turnover x100

Question 37

labour cost per unit

Answer 37

labour costs / units of output

Question 38

return on capital employed %

Answer 38

operating profit / total equity + non current liabilities x100

Question 39

payables days (creditors)

Answer 39

payables / costs of sales x 365

Question 40

receivables days (debtors)

Answer 40

receivables / costs of sales x 365

Question 41

inventory turnover

Answer 41

costs of goods sold / average inventories sold

Question 42

average rate of return %

Answer 42

net return from project £ or number of years / initial cost of project x 100

Question 43

gearing %

Answer 43

non current liabilities / total equity + non current liabilities x 100

Question 44

current ratio

Answer 44

current assets / current liabilities