Formulas

Question 1

Component 1:
Market growth=

Answer 1

(Change/original) x 100

Question 2

Component 1 & 2:
Percentage change=

Answer 2

(Change/ original) x 100

Question 3

Component 1&2:
Price elasticity of demand=

Answer 3

Percentage change in demand/ percentage change in price

Question 4

Component 1&2:
Income elasticity of demand=

Answer 4

Percentage change in demand/ percentage change in income

Question 5

Component 1:
Total costs=

Answer 5

Total fixed costs + total variable costs

Question 6

Component 1:
Total revenue=

Answer 6

Selling price x number of units sold

Question 7

Component 1:
Profit=

Answer 7

Total revenue - total cost
Or (using contribution)
Total contribution- total fixed costs

Question 8

Component 1:
Total costs per unit=

Answer 8

Total cost/ number of units

Question 9

Component 1&2:
Unit contribution=

Answer 9

Selling price - unit variable costs

Question 10

Component 1&2:
Total contribution=

Answer 10

Unit contribution x number of units
Or
Total revenue- total variable costs

Question 11

Component 1:
Breakeven=

Answer 11

Total fixed costs/ unit contribution

Question 12

Component 1:
Margin of safety=

Answer 12

Actual sales - breakeven point
(It must be a positive number)

Question 13

Component 1:
Net cash flow=

Answer 13

Cash inflows- cash outflows

Question 14

Component 1:
Opening balance=

Answer 14

Closing balance from the previous period

Question 15

Component 1:
Closing balance=

Answer 15

Opening balance + net cash flow

Question 16

Component 1&2:
Budget variance=

Answer 16

Actual - budget
(It’s the difference between them)

Question 17

Component 1&2:
Adverse variance=

Answer 17

Bad for the business, resulting in worse than expected profits

Question 18

Component 1&2:
Favourable variance=

Answer 18

Good for the business, resulting in higher than expected profits

Question 19

Component 1&2:
Cost of sales=

Answer 19

(Opening stock +purchases)- closing stock

Question 20

Component 1&2:
Gross profit=

Answer 20

Revenue- cost of sales

Question 21

Component 1&2:
Net profit=

Answer 21

Gross profit- expenses

Question 22

Component 1&2:
Gross profit margin=

Answer 22

(Gross profit/ revenue) x100

Question 23

Component 1&2:
Net profit margin=

Answer 23

(Net profit/ revenue)x 100

Question 24

Component 1&2:
Return of capital employed=

Answer 24

(Profit/ capital invested) x100

Question 25

Component 1: Added value=

Answer 25

Selling price -cost of materials

Question 26

Component 1: Labour productivity=

Answer 26

Total output/ number of employees

Question 27

Component 1: Capital productivity=

Answer 27

Total output /capital employed

Question 28

Component 1: Capacity utilisation=

Answer 28

(Actual output/ maximum output) x100

Question 29

Component 1: Labour turnover =

Answer 29

(Number of employees leaving/ total number of employees) x100

Question 30

Component 2: Pie charts=

Answer 30

Work out percentage- (Value of that category/ total value of all categories) x100 Work out the degree- (360/100) x categories percentage

Question 31

Component 2: Histograms (frequency density)=

Answer 31

Frequency/ class width Or Number of occurances/ range in interval (width of the bar)

Question 32

Component 2: Correlation=

Answer 32

Measures the relationship between two variables with the use of a scatter graph and line of best fit

Question 33

Component 2: Correlation -positive=

Answer 33

Points are closely gathered around the line and slopes up

Question 34

Component 2: Correlation- negative=

Answer 34

Points are closely gathered around the line slopes down

Question 35

Component 2: Index numbers=

Answer 35

(Value in period to be converted/ value in base year) x 100

Question 36

Component 2: Moving averages=

Answer 36

Take the first three numbers / 3 , etc

Question 37

Component 2: Extrapolation=

Answer 37

Uses line of best fit on a graph to extent beyond the known variables to predict or forecast the future

Question 38

Component 2: Retained profit=

Answer 38

Net profit or profit for the year- tax and dividends

Question 39

Component 2: Working capital=

Answer 39

Current assets- current liabilities

Question 40

Component 2: Net assets=

Answer 40

(Non current assets + working capital ) -non current liabilities

Question 41

Component 2: Shareholder funds/ total equity=

Answer 41

Share capital + reserves and retained earnings

Question 42

Component 2: Capital employed =

Answer 42

Shareholders funds + non current liabilities

Question 43

Component 2: Non current assets=

Answer 43

Fixed assets

Question 44

Component 2: Non current liabilities =

Answer 44

Long term liabilities

Question 45

Component 2: Trade receivables=

Answer 45

Debtors

Question 46

Component 2: Trade payables =

Answer 46

Creditors

Question 47

Component 2: Net current assets=

Answer 47

Working capital

Question 48

Component 2: Depreciation =

Answer 48

(Initial cost- residual value)/ expected life No. years Or A fixed percentage of the original cost

Question 49

Component 2: Net book value (NBV)=

Answer 49

Initial cost- total deprecation to date

Question 50

Component 2: Current ratio=

Answer 50

Current assets/ current liabilities

Question 51

Component 2: Acid test ratio=

Answer 51

(Current assets - stock)/ current liabilities

Question 52

Component 2: Gearing=

Answer 52

(Long term liabilities/ capital employed) x 100

Question 53

Component 2: Payback period=

Answer 53

Add together each years net cash flow until initial cost is recovered

Question 54

Component 2: Payback to calculate months=

Answer 54

(Amount needed from the year/ amount available in the year) x12

Question 55

Component 2: Average rate if return (%)=

Answer 55

((Average net return -profit per annum)/ initial cost) x100

Question 56

Component 2: Present value=

Answer 56

Expected net cash flow x appropriate discount factor

Question 57

Component 2: Net present value=

Answer 57

Total of present values - capital outlay or initial cost

Question 58

Component 2: Decision trees: actual value or predicted (actual) profit or loss=

Answer 58

The amount you expect to receive if a particular course or route is followed

Question 59

Component 2: Decision trees: expected monetary value(EMVs) =

Answer 59

•Weighted average of the likely return allowing for particular decisions to be made and the probability of a specific outcome occurring •work backwards,multiply actual value by probability of the event occurring, at circles add these together, at squares take off any cost then choose the highest one

Question 60

Component 2: Critical path analysis: total float=

Answer 60

LFT- duration- EST (Work backwards)

Question 61

Component 2: Critical path analysis: Free float=

Answer 61

EST- duration- EST (Work backwards)

Question 62

Component 2: Cost benefits analysis: social costs=

Answer 62

Negative externality (public cost)+ the private cost

Question 63

Component 2: Cost benefit analysis: social benefits=

Answer 63

Positive externality (public benefit) + the private benefit

Question 64

Component 1: Market size=

Answer 64

Total number of sales in the whole market (volume) Or Total revenue in the whole market (value)

Question 65

Market share

Answer 65

(Sales from one business/total market) x 100