Formulas

Question 1

Revenue (sales or turnover)

Answer 1

Selling price per unit X number of units sold

Question 2

Variable costs (total variable costs)

Answer 2

Variable cost per unit X number of units sold

Question 3

Total costs

Answer 3

Fixed cost + variable costs

Question 4

Profit

Answer 4

Total revenue — total costs

Total contribution— fixed costs

Question 5

Market capitalisation of a business

Answer 5

Number of issued shares X Current share prices

Question 6

Expected value

Answer 6

(Outcome A X profitability of A) + (Outcome B X profitability of B)

Question 7

Net gain

Answer 7

Expected value — initial cost of decision

Question 8

Market growth (%)

Answer 8

Change in the size of a market
——————————————— X 100
Original size of a market

Question 9

Market share (%)

Answer 9

Sales of one product/brand/business
————————————————X100
Total sales in a market

Question 10

Added value

Answer 10

Sales value - costs of brought in goods and services.

Question 11

Labour productivity

Answer 11

Output over a period of time
———————————————————
Number of employers

Question 12

Unit costs (average costs)

Answer 12

Total costs
—————————————
Number of units of output

Question 13

Capacity utilisation (%)

Answer 13

Actual output
——————————X100
Maximum possible output

Question 14

Return on investment (%)

Answer 14

Profit from the investment (£)
————————————————X100
Cost of the investment (£)

Question 15

Gross profit

Answer 15

Revenue — cost of sales

Question 16

Profit from operations (operating profit)

Answer 16

Gross profit -operating expenses

Question 17

Profit for the year

Answer 17

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

Question 18

Gross profit margin (%)

Answer 18

Gross profit
—————— X 100
Revenue

Question 19

Operating profit margin (%)

Answer 19

Operating profit
———————— X 100
Revenue

Question 20

Profit from the year (%)

Answer 20

Profit for the year
————————— X 100
Revenue

Question 21

Variance

Answer 21

Budgeted figure — actual figure

Question 22

Contribution per unit

Answer 22

Selling price — variable cost per unit

Question 23

Total contribution

Answer 23

Contribution per unit X units sold

Total revenue — total variable cost

Question 24

Break even output

Answer 24

Fixed costs
——————————
Contribution per unit

Question 25

Margin of safety

Answer 25

Actual level of output — break even level of output

Question 26

Labour turnover (%)

Answer 26

No. of staff leaving ——————————x100 No. of staff employed

Question 27

Employee retention rate (%)

Answer 27

No of employees remaining at the business over the period of time ————————————————X100 No of employees at the beginning Of that period of time

Question 28

Employees cost (% of turnover)

Answer 28

Employee costs ————————X100 Turnover

Question 29

Labour cost per unit

Answer 29

Labour cost ————————— Units of output

Question 30

Return on capital employed (ROCE %)

Answer 30

Operating profit ————————————————X100 Total equity + non current liabilities

Question 31

Current ratio

Answer 31

Current assets —————————— Current liabilities

Question 32

Gearing (%)

Answer 32

Non-current liabilities ————————————————X100 Total equity + non-current liabilities

Question 33

Payable days

Answer 33

Payables —————————X 365 Cost of sales

Question 34

Receivable days

Answer 34

Receivables ————————X365 Revenue

Question 35

Inventory turnover

Answer 35

Cost of sales ———————————— Average inventory held

Question 36

Average rate of return (%)

Answer 36

Average annual return (£) ————————————- Initial cost of project (£)