Formula

Question 1

Revenue/Sales/Turnover

Answer 1

Selling price per unit x Number of units sold

Question 2

Variable costs

Answer 2

Variable cost per unit x Number of units sold

Question 3

Total costs

Answer 3

Fixed costs + Variable costs

Question 4

Profit

Answer 4

Total revenue - Total Costs

OR

Total contribution - Fixed costs

Question 5

Market capitalisation of a business

Answer 5

Number of shares issued x Current share price

Question 6

Expected value of a decision with two possible outcomes

Answer 6

A & B =
(Pay-off of A × probability of A) + (Pay-off of B × probability of B)

Question 7

Net gain

Answer 7

Expected value - Initial cost of a decision

Question 8

Market growth (%)

Answer 8

Change in the size of the market over a period
———————————————– x100
Original size of the market

Question 9

Market share (%)

Answer 9

Sales of one product OR brand OR business
———————————————- x100
Total sales in the market

Question 10

Added value

Answer 10

Sales revenue - costs of bought-in goods and services

Question 11

Labour productivity

Answer 11

Output over a time period
/
Number of employees

Question 12

Unit costs (average costs)

Answer 12

Total costs
/
Number of units of output

Question 13

Capacity utilisation (%)

Answer 13

Actual output
———————————————– x100
Maximum possible output

Question 14

Return on investment (%)

Answer 14

Profit from the investment (£)
———————————————— x100
Cost of the investment (£)

Question 15

Gross profit

Answer 15

Revenue - Cost of sales

Question 16

Profit from operations/Operating profit

Answer 16

Gross profit - Operating expenses

Question 17

Profit for year

Answer 17

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

Question 18

Gross profit margin (%)

Answer 18

Gross profit
——————– x100
Revenue

Question 19

Profit from operations margin/Operating profit margin (%)

Answer 19

Operating profit
————————— x100
Revenue

Question 20

Profit for year margin (%)

Answer 20

Profit for year
————————- x100
Revenue

Question 21

Variance

Answer 21

Budgeted figure - Actual figure

Question 22

Contribution per unit

Answer 22

Selling price - Variable costs per unit

Question 23

Total contribution

Answer 23

Contribution per unit x Units sold

OR

Total revenue - Total variable costs

Question 24

Break-even output

Answer 24

Fixed costs
/
Contribution per unit

Question 25

Margin of safety

Answer 25

Actual level of output - Break-even level of output

Question 26

Labour turnover (%)

Answer 26

Number of staff leaving ---------------------------------------------- x100 Number of staff employed by the business

Question 27

Employee retention rate (%) for a particular time period

Answer 27

Number of employees who remained with the business for the whole period of time ------------------------------------------------ x100 Number of employees at start of the time period

Question 28

Employee costs as a percentage of turnover

Answer 28

Employee costs ----------------------- x100 Turnover

Question 29

Labour costs per unit

Answer 29

Labour costs / Units of output

Question 30

Return on capital employed (ROCE) (%)

Answer 30

Operating profit -------------------------------------------- x100 Total equity + non-current liabilities Where total equity + non-current liabilities = capital employed

Question 31

Current ratio

Answer 31

Current assets ------------------------- x100 Current liabilities

Question 32

Gearing (%)

Answer 32

Non-current liabilities ------------------------------------------ x100 Total equity + non-current liabilities Where total equity + non-current liabilities = capital employed

Question 33

Payables days

Answer 33

Payables ------------------ x365 Cost of sales

Question 34

Receivables days

Answer 34

Receivables ----------------- x365 Revenue

Question 35

Inventory turnover

Answer 35

Cost of sales / Average inventories held

Question 36

Average rate of return (%)

Answer 36

Average annual return (£) -------------------------------------- x100 Initial cost of project (£)