Formulas

Question 1

Revenue
(Sales or Turnover)

Answer 1

Selling price per unit
×
Number of units sold

Question 2

Variable costs
(Total variable costs)

Answer 2

Variable cost per unit
×
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 issued shares
×
Current share price

Question 6

Expected value of a decision with two possible outcomes eg. A & B

Answer 6

[Pay-off of A × probability of A]
+
[Pay-off of B × probability of B]

Question 6

Expected value of a decision with two possible outcomes
eg. A & B

Answer 6

[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 decision

Question 8

Market growth (%)

Answer 8

[Change in the size of the market over a period
/
Original size of the market]
×
100

Question 9

Market share (%)

Answer 9

[Sales of one product OR brand OR business
/
Total sales in the market]
×
100

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
/
Maximum possible output]
× 100

Question 14

Return on investment (%)

Answer 14

[Profit from the investment (£)
/
Cost of the investment (£)]
× 100

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
/
Revenue × 100

Question 19

Profit from operations margin
(Operating profit margin) (%)

Answer 19

[Operating profit
/
Revenue]
×
100

Question 20

Profit for year margin (%)

Answer 20

[Profit for year
/
Revenue]
×
100

Question 21

Variance

Answer 21

Budgeted figure
–
actual figure

Question 21

Contribution per unit

Answer 21

Selling price
−
Variable costs per unit

Question 21

Total contribution

Answer 21

Contribution per unit × Units sold
OR
Total revenue − Total variable costs

Question 22

Break-even output

Answer 22

Fixed costs / Contribution per unit

Question 23

Margin of safety

Answer 23

Actual level of output − Break-even level of output

Question 24

Labour turnover (%)

Answer 24

[Number of staff leaving / Number of staff employed by the business] × 100

Question 25

Employee retention rate (%) for a particular time period

Answer 25

[Number of employees who remained with the business for the whole period of time / Number of employees at start of the time period ] × 100

Question 26

Employee costs as percentage of turnover

Answer 26

[Employee costs / Turnover ] × 100

Question 27

Labour cost per unit

Answer 27

Labour costs / Units of output

Question 28

Return on capital employed (ROCE)(%)

Answer 28

Operating profit / [Total equity + non-current liabilities] × 100 (Where total equity + non-current liabilities = capital employed)

Question 29

Current ratio

Answer 29

Current assets / Current liabilities

Question 30

Gearing (%)

Answer 30

Non-current liabilities / [Total equity + non-current liabilities] × 100 (Where total equity + non-current liabilities = capital employed)

Question 31

Payables days

Answer 31

[Payables / Cost of sales] × 365

Question 32

Receivables days

Answer 32

[Receivables / Revenue] × 365

Question 33

Inventory turnover

Answer 33

Cost of sales / Average inventories held

Question 34

Average rate of return (%)

Answer 34

[Average annual return (£) / Initial cost of project (£)] × 100

Question 35

Income elasticity of demand

Answer 35

Percentage change in quantity demanded / Percentage change in income