formulas Flashcards

1
Q

total costs (£)

A

fixed costs + variable costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

profit (£)

A

total revenue - total costs

total contribution - fixed costs
(selling price - variable costs - fixed costs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

total variable costs (£)

A

variable cost per unit x number of units sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

revenue (sales or turnover) (£)

A

selling price per unit x number of units sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

market capitalisation (£)

A

the total value of a companies issued shares

current share price x number of shares issued

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

(decision trees) expected value

A

(financial result of A × probability of A) + (financial result of B × probability of B)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

(decision trees) net gain (£)

A

expected value - initial cost of decision

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

market size/sales volume (units)

A

the quantity of goods and services produced in a particular market over a period of time (usually one year)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

market size/sales value (£)

A

total revenue generated from selling goods and services produced in a particular market over a period of time (usually one year)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

market growth (%)

A

change in market size/original market size x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

sales growth (%)

A

change in sales/original sales x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

market share (%)

A

sales of one product OR brand OR business/total sales in the market x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

price elasticity of demand (%)

A

change in demand/change in price x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

coefficient range PED and YED

A

PED:

more than 1 (demand is more sensitive to price change, eg. cuts can = revenue increases significantly) elastic.
less than 1 (demand is less sensitive to price change) inelastic

YED:

normal goods = demand increases as income increases

inferior goods = less than 1, demand decreases as income increases eg. used cars, tesco own brand orange juice
necessities = 0-1, demand decreases as income increases eg. staple groceries like milk, own label goods.
luxury = more than 1, demand increases as income increases. eg. branded goods, expensive holidays

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

added value (£)

A

selling price - cost of raw materials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

unit cost (£)

A

cost per unit:

total costs of production/number of units

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

labour productivity

A

output over a time period/number of employees

eg. 1000 units per employee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

capacity utilisation (%)

A

actual level of output/maximum possible output x 100

19
Q

return on investment (%)

A

annual return (£)/cost of investment (£) x 100

20
Q

gross profit (£)

A

sales revenue - cost of sales

21
Q

operating profit (£)

A

gross profit - operating expenses

22
Q

profit of the year (£)

A

(operating profit + all other profit) - (net financial costs - tax)

23
Q

gross/operating/yearly profit margin (%)

A

/revenue x100

24
Q

variance (£)

A

budgeted figure - actual figure

favourable variance = actual profits are higher than budgeted
adverse variance = actual profits are lower than budgeted

25
contribution per unit (£)
profits made on each individual product selling price per unit - variable costs per unit
26
total contribution (£)
contribution per unit x total units sold total revenue - total variable costs
27
breakeven output (units)
fixed costs/contribution per unit
28
breakeven point
where total revenue equals total costs
29
margin of safety (units)
actual level of output - breakeven level of output
30
labour turnover (%)
number of staff leaving/number of staff employed x 100
31
employee retention rate (%)
number of employees who stayed for the whole period/number of employees at the start of the time period x 100
32
employee costs as a percentage of turnover (%)
employee costs/sales turnover x 100
33
labour cost per unit (£)
labour cost/units of output
34
return on capital employed (£)
how efficiently a business has managed its finance operating profit/capital employed ideally, the higher the ROCE the better (higher op profit than cap employed)
35
capital employed
total equity + non-current liabilities (essentially equity is retained profits and share capital + non-current liabilities are long term debts)
36
current ratio (liquidity ratio)
current assets/current liabilities eg. debtors, cash, stock eg. creditors, overdraft
37
gearing (%)
non-current liabilities/capital employed x 100 (total equity + non-current liabilities = capital employed) eg. loans, mortgages, bonds
38
payables/creditor days
owed by a business to others eg. suppliers. want it to be more than receivables/debtor days payables/cost of sales x 365
39
receivables/debtors days
owed to a business by others eg. customers receivables/sales revenue x 365
40
inventory turnover (times)
how many times the business replaces its inventory each year cost of goods sold (£)/average inventory held (£)
41
average rate of return (%)
average annual return/initial cost of project x 100
42
cash flow
inflows - outflows
43
npv (net present value)
discount factor x cash flow