formulae to learn

Question 1

market capitalisation

Answer 1

share price x no of shares issued

Question 2

market share

Answer 2

sales of one firm/total market sales x 100

Question 3

labour productivity

Answer 3

total output/no of employees

Question 4

return on investment

Answer 4

operating profit/cost of investment x 100

Question 5

proportion of long term funding that is debt

Answer 5

debt/long term funding x 100

Question 6

gross profit

Answer 6

revenue - cost of sales

Question 7

cost of sales

Answer 7

opening inventory + purchases - closing inventory

Question 8

operating profit

Answer 8

gross profit - expenses

Question 9

profit of the year

Answer 9

operating profit - interest and taxation and taking into account exceptional items

Question 10

net cash flow

Answer 10

cash inflows - cash outflows

Question 11

closing balance

Answer 11

opening balance + net cash flow

Question 12

break-even output

Answer 12

fixed costs/contribution per unit

Question 13

contribution per unit

Answer 13

selling price - variable cost per unit

Question 14

margin of safety

Answer 14

actual output - break even output

Question 15

gross profit margin

Answer 15

gross profit / sales revenue x 100

Question 16

profit from operation margin

Answer 16

operating profit / sales revenue x 100

Question 17

profit of the year margin

Answer 17

profit of the year / sales revenue x 100

Question 18

labour turnover

Answer 18

number of staff leaving/average number of staff x 100

Question 19

retention rates

Answer 19

number of employees serving for more than 1 year / average number of staff x 100

Question 20

labour productivity

Answer 20

output / number of workers

Question 21

employee costs as a % of turnover

Answer 21

employee costs / revenue x 100

Question 22

labour costs per unit

Answer 22

total labour costs / total output

Question 23

return on capital employed

Answer 23

operating profit / total equity + non-current liabilities x 100

Question 24

current ratio

Answer 24

current assets / current liabilities

Question 25

gearing

Answer 25

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

Question 26

payable days

Answer 26

payables / cost of sales x 365

Question 27

receivable days

Answer 27

receivables / revenue x 365

Question 28

inventory turnover

Answer 28

cost of sales / average inventories held

Question 29

capital employed

Answer 29

total equity + non current liabilities