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Business Formulas > Formulas > Flashcards

Formulas Flashcards

1
Q

Component 1:
Market growth=

A

(Change/original) x 100

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2
Q

Component 1 & 2:
Percentage change=

A

(Change/ original) x 100

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3
Q

Component 1&2:
Price elasticity of demand=

A

Percentage change in demand/ percentage change in price

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4
Q

Component 1&2:
Income elasticity of demand=

A

Percentage change in demand/ percentage change in income

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5
Q

Component 1:
Total costs=

A

Total fixed costs + total variable costs

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6
Q

Component 1:
Total revenue=

A

Selling price x number of units sold

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7
Q

Component 1:
Profit=

A

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

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8
Q

Component 1:
Total costs per unit=

A

Total cost/ number of units

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9
Q

Component 1&2:
Unit contribution=

A

Selling price - unit variable costs

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10
Q

Component 1&2:
Total contribution=

A

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

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11
Q

Component 1:
Breakeven=

A

Total fixed costs/ unit contribution

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12
Q

Component 1:
Margin of safety=

A

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

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13
Q

Component 1:
Net cash flow=

A

Cash inflows- cash outflows

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14
Q

Component 1:
Opening balance=

A

Closing balance from the previous period

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15
Q

Component 1:
Closing balance=

A

Opening balance + net cash flow

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16
Q

Component 1&2:
Budget variance=

A

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

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17
Q

Component 1&2:
Adverse variance=

A

Bad for the business, resulting in worse than expected profits

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18
Q

Component 1&2:
Favourable variance=

A

Good for the business, resulting in higher than expected profits

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19
Q

Component 1&2:
Cost of sales=

A

(Opening stock +purchases)- closing stock

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20
Q

Component 1&2:
Gross profit=

A

Revenue- cost of sales

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21
Q

Component 1&2:
Net profit=

A

Gross profit- expenses

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22
Q

Component 1&2:
Gross profit margin=

A

(Gross profit/ revenue) x100

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23
Q

Component 1&2:
Net profit margin=

A

(Net profit/ revenue)x 100

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24
Q

Component 1&2:
Return of capital employed=

A

(Profit/ capital invested) x100

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25
Q

Component 1:
Added value=

A

Selling price -cost of materials

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26
Q

Component 1:
Labour productivity=

A

Total output/ number of employees

27
Q

Component 1:
Capital productivity=

A

Total output /capital employed

28
Q

Component 1:
Capacity utilisation=

A

(Actual output/ maximum output) x100

29
Q

Component 1:
Labour turnover =

A

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

30
Q

Component 2:
Pie charts=

A

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

31
Q

Component 2:
Histograms (frequency density)=

A

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

32
Q

Component 2:
Correlation=

A

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

33
Q

Component 2:
Correlation -positive=

A

Points are closely gathered around the line and slopes up

34
Q

Component 2:
Correlation- negative=

A

Points are closely gathered around the line slopes down

35
Q

Component 2:
Index numbers=

A

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

36
Q

Component 2:
Moving averages=

A

Take the first three numbers / 3 , etc

37
Q

Component 2:
Extrapolation=

A

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

38
Q

Component 2:
Retained profit=

A

Net profit or profit for the year- tax and dividends

39
Q

Component 2:
Working capital=

A

Current assets- current liabilities

40
Q

Component 2:
Net assets=

A

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

41
Q

Component 2:
Shareholder funds/ total equity=

A

Share capital + reserves and retained earnings

42
Q

Component 2:
Capital employed =

A

Shareholders funds + non current liabilities

43
Q

Component 2:
Non current assets=

A

Fixed assets

44
Q

Component 2:
Non current liabilities =

A

Long term liabilities

45
Q

Component 2:
Trade receivables=

A

Debtors

46
Q

Component 2:
Trade payables =

A

Creditors

47
Q

Component 2:
Net current assets=

A

Working capital

48
Q

Component 2:
Depreciation =

A

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

49
Q

Component 2:
Net book value (NBV)=

A

Initial cost- total deprecation to date

50
Q

Component 2:
Current ratio=

A

Current assets/ current liabilities

51
Q

Component 2:
Acid test ratio=

A

(Current assets - stock)/ current liabilities

52
Q

Component 2:
Gearing=

A

(Long term liabilities/ capital employed) x 100

53
Q

Component 2:
Payback period=

A

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

54
Q

Component 2:
Payback to calculate months=

A

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

55
Q

Component 2:
Average rate if return (%)=

A

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

56
Q

Component 2:
Present value=

A

Expected net cash flow x appropriate discount factor

57
Q

Component 2:
Net present value=

A

Total of present values - capital outlay or initial cost

58
Q

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

A

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

59
Q

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

A

•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

60
Q

Component 2:
Critical path analysis: total float=

A

LFT- duration- EST
(Work backwards)

61
Q

Component 2:
Critical path analysis: Free float=

A

EST- duration- EST
(Work backwards)

62
Q

Component 2:
Cost benefits analysis: social costs=

A

Negative externality (public cost)+ the private cost

63
Q

Component 2:
Cost benefit analysis: social benefits=

A

Positive externality (public benefit) + the private benefit

Business Formulas (2 decks)

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