Formulas

Question 1

What is the formula for revenue?

Answer 1

Selling price per unit x number of units sold

Question 2

What is the formula for total variable costs?

Answer 2

Variable costs per unit x number of units sold

Question 3

What is the formula for total costs?

Answer 3

Fixed costs + variable costs

Question 4

What is the formula of profit?

Answer 4

Total revenue - total costs

Question 5

What is the formula of market capitalisation?

Answer 5

Number of issued shares x current share price

Question 6

What is the formula for expected value on decision tree?

Answer 6

[Pay off A x Probability A] + [Pay off B x Probability B]

Question 7

What is the formula for net gain on a decision tree?

Answer 7

Expected value - initial cost

Question 8

What is the formula for market growth?

Answer 8

(Change in the size of the market over a period/original size of market) x 100

Question 9

What is the formula for market share?

Answer 9

(sales of one product or brand or business / total sales in the market) x 100

Question 10

What is the formula for added value?

Answer 10

Sales revenue - cost of bought in goods and services

Question 11

What is the formula for labour productivity?

Answer 11

Output over a time period / number of employees

Question 12

What is the formula for unit costs?

Answer 12

Total costs / number of units of output

Question 13

What is the formula for capacity utilisation?

Answer 13

(Actual output / maximum possible output) x 100

Question 14

What is the formula for return on investment?

Answer 14

(profit from the investment / cost of the investment) x 100

Question 15

What is the formula for gross profit?

Answer 15

Reveue - cost of sales

Question 16

What is the formula for profit from operations?

Answer 16

Gross profit - operating expenses

Question 17

What is the formula for profit for year?

Answer 17

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

Question 18

What is the formula for the profit margins?

Answer 18

(type of profit / revenue) x 100

Question 19

What is the variance formula?

Answer 19

Budgeted figure - actual figure

Question 20

What is the formula for contribution per unit?

Answer 20

Selling price - variable costs per unit

Question 21

What is the formula for total contribution?

Answer 21

Contribution per unit x units sold

OR

Total revenue - total variable costs

Question 22

What is the formula for break even output?

Answer 22

fixed costs / contribution per unit

Question 23

What is the formula for margin of safety?

Answer 23

Actual level of output - break even level of output

Question 24

What is the formula for labour turnover?

Answer 24

(number of staff leaving / number of staff employed by the business) x 100

Question 25

What is the formula for employee costs as a percentage of turnover?

Answer 25

(employee costs / turnover) x 100

Question 26

What is the formula for labour costs per unit?

Answer 26

Labour costs / units of output

Question 27

What is the formula for return on capital employed?

Answer 27

(operating profit / total equity + non current liabilities) x 100 total equity + non current liabilities= capital employed

Question 28

What is the formula for current ratio?

Answer 28

Current assets / current liabilities

Question 29

What is the formula for gearing?

Answer 29

(non current liabilities / total equity + non current liabilities) x 100 total equity + non current liabilities = capital employed

Question 30

What is the formula for payables days?

Answer 30

(payables / cost of sales) x 365

Question 31

What is the formula for recievables days?

Answer 31

(Recievables / revenue) x 365

Question 32

What is the formula for inventory turnover?

Answer 32

costs of sales / average inventories held

Question 33

What is the formula for average rate of return?

Answer 33

(average annual return / initial costs of project) x 100