Formulas Flashcards
unit costs (average costs)
Total costs / number of units of ouput.
Capacity utilisation (%)
Actual output / maximum possible output x 100
Return on investment (%)
Profit from the investment (£) / cost of the investment (£) x 100
Gross profit
Revenue - costs of sales.
Profit from operations (operating profit)
Gross profit - operating expenses
Profit for the year
operating profit + profit from other activities - net finance costs - tax
Gross profit margin (%)
Gross profit / revenue x 100
Profit from operations margin (operating profit margin (%))
Operating profit / revenue x 100
Profit for the year margin (%)
Profit for the year / revenue x 100
Revenue
Selling price per unit x number of units sold
Variable costs (total variable costs)
Variable cost per unit x number of units sold.
Total costs
Fixed costs + variable costs
Profit
Total revenue - total costs
OR
total contribution - fixed costs
Market capitalisation of a business
Number of issued shares x current share price.
Expected value of a decision with two possible outcomes e.g.
A & B =
[Pay-off of A × probability of A] + [Pay-off of B × probability of B]
Net gain
Expected value - initial cost of decision
Market growth (%)
Change in the size of the market over a period / original size of the market x 100
Added value
Sales revenue - costs of bought in goods and services.
Labour productivity
Output over a time period / number of employees.
Variance
budgeted figure - actual figure.
Contribution per unit
Selling price - variable costs per unit
Total contribution
Contribution per unit x units sold
OR
total revenue - total variable costs
Break even output
Fixed costs / contribution per unit
Margin of safety
Actual level of output - break even level of output
