formulas

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

Total variable costs

Answer 3

variable cost per unit X number of units sold

Question 4

Sales revenue

Answer 4

selling price per unit X number of units sold

Question 5

Market capitalisation

Answer 5

number of issued shares X share price

Question 6

Expected value of a decision with two possible outcomes ( A and B)

Answer 6

(pay off of A x probability of A) + ( pay off of 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 over a period of time ( usually one year)

Question 9

market size value

Answer 9

total sales revenue generated from selling all of the goods and services produced by a particular market over a period of time

Question 10

sales volume

Answer 10

quantity of goods and services produced by a particular business over a period of time (usually one year)

Question 11

sales value

Answer 11

total sales revenue of a particular business over a period of time

Question 12

market growth (%)

Answer 12

change in market size/ original market size X 100

Question 13

sales growth

Answer 13

change in product sales/ previous sales of product or business X 100

Question 14

market share

Answer 14

sales of one product/brand/business % total market sales X 100

Question 15

Price elasticity of demand

Answer 15

percentage change in quantity demanded % percentage change in price X 100

Question 16

price inelastic demand coefficient range

Answer 16

less than 1

Question 17

price elastic demand coefficient range

Answer 17

greater than 1

Question 18

Added value

Answer 18

sales revenue - cost of bought in goods and services

Question 19

Labour productivity

Answer 19

output per time period % number of employees

Question 20

Unit costs

Answer 20

total costs of production % number of units of output produced

Question 21

Capacity utilisation

Answer 21

actual output in a given time period % maximum possible output in a given time period X 100

Question 22

Return on investment

Answer 22

return on investment (£) % cost of investment (£) X 100

Question 23

Gross profit

Answer 23

Sales revenue - cost of sales

Question 24

Profit from operations = operating profit

Answer 24

sales revenue - cost of sales - operating expenses

Question 25

Profit for the year

Answer 25

operating profit + profit from other activities - net finance costs - tax

Question 26

Variance

Answer 26

the difference between an actual and budgeted figure

Question 27

Favourable variance

Answer 27

actual sales or products that are higher than budget or costs are lower than budget

Question 28

Adverse variance

Answer 28

actual sales or profits are lower than budget or costs are higher than budget

Question 29

Contribution per unit

Answer 29

selling price - variable costs per unit

Question 30

Total contribution per unit

Answer 30

contribution per unit X units produced or sold OR total revenue - total variable costs

Question 31

Break even output

Answer 31

fixed costs / contribution per unit

Question 32

on a break even chart, what is the break even output?

Answer 32

level of output at which total revenue = total costs

Question 33

on a break even chart, what is the level of profit at a given level of output?

Answer 33

vertical distance between the total revenue line and the total cost line

Question 34

What is the margin of safety

Answer 34

actual level of output - breakeven level of output

Question 35

Gross profit margin

Answer 35

gross profit/sales revenue X 100

Question 36

Operating profit margin

Answer 36

operating profit/sales revenue X 100

Question 37

profit for the year margin

Answer 37

profit for the year/sales revenue X 100

Question 38

labour turnover

Answer 38

number of staff leaving during the year

Question 39

employee retention rate (%) for a particular time period

Answer 39

number of staff leaving during the year % average number of staff employed by the business during the year X 100

Question 40

employee costs as a percentage of turnover

Answer 40

employee costs % sales turnover X 100

Question 41

labour cost per unit

Answer 41

labour costs % units of output

Question 42

ROCE %

Answer 42

operating profit / total equity + non current liabilities X 100

Question 43

current ratio

Answer 43

current assets / current liabilities

Question 44

gearing %

Answer 44

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

Question 45

payables days

Answer 45

payables / cost of sales X 365

Question 46

recievable days

Answer 46

recievables / revenue X 100

Question 47

inventory turnover

Answer 47

cost of goods sold / average inventories held

Question 48

average rate of return %

Answer 48

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