Formulas

Question 1

Capital Gearing formula

Answer 1

Non current liabilities/ (Issued share capital + Reserves + Non-current liabilities)
or
NCL/ capital employed (total equity + NCL)

Question 2

Current Ratio

Answer 2

Current Assets/Current Liabilities ( Expressed as x:1)

Question 3

Dividend cover

Answer 3

Profit after interest and tax/ Ordinary share dividends paid

Question 4

Dividend yield

Answer 4

Dividend per share/ Market price per share x 100

Question 5

Earnings per share

Answer 5

Earnings in pence (Profit After Tax in pence)/ Number of issued ordinary shares

Question 6

Expenses in relation to revenue

Answer 6

Expenses / Revenue x 100

Question 7

Gross profit margin

Answer 7

Gross profit / revenue x 100

Question 8

Interest cover

Answer 8

Profit before interest and tax/ Interest payable (incl in finance cost)

Question 9

Liquid capital ratio (acid test ratio)

Answer 9

Current assets- inventory/ current liabilities
expressed as x:1

Question 10

Markup

Answer 10

Gross profit/ Cost of Sales x 100

Question 11

Price earnings

Answer 11

current market price / earnings per share

Question 12

Profit in relation to revenue

Answer 12

Profit before tax/ Revenue x 100

Question 13

Rate of inventory turnover

Answer 13

Cost of sales/ Average inventory (average inventory = opening + closing inventory /2)

Question 14

Rate of inventory turnover (days)

Answer 14

Average inventory/ Cost of sales x 365

Question 15

Return of capital employed (sole trader)

Answer 15

Profit before interest / Capital employed x 100

Question 16

Return on capital employed (limited company)

Answer 16

Operating profit/ capital employed x 100
Capital employed= Equity + non current liabilities (either opening or closing figure could be used in the calculation)

Question 17

Trade payable days

Answer 17

Trade payables days/ Credit Purchases x 365

Question 18

Trade receivable days

Answer 18

Trade receivables/Credit sales x 365

Question 19

Total dividend paid

Answer 19

Profit after tax/ dividend cover

Question 20

Disposal proceeds

Answer 20

disposal proceeds - NBV= P/L

Question 21

Dividends paid

Answer 21

Number of shares x Dividend per share

Question 22

Number of shares

Answer 22

Share capital / nominal value of each share

Question 23

Using mark up to calculate missing figures

Answer 23

Gross profit / Cost of Sales x 100
Cost of Sales = Revenue / 1.6
Revenue = Cost of Sales x 1.6

Question 24

Cost of Sales

Answer 24

Opening inventory + Purchases - Purchase returns + Carriage inwards - Closing inventory

Question 25

Using gross profit margin to calculate missing figures

Answer 25

GP = Revenue x 0.6 revenue = GP/ 0.6 revenue = C.O.S / 0.4

Question 26

Gross profit

Answer 26

Revenue - Cost of Sales

Question 27

Profit for the year

Answer 27

Gross profit + other income - expenses

Question 28

Operating profit (limited company income statement)

Answer 28

Gross profit + other income - expenses

Question 29

Using statements of affairs to calculate profit for the year

Answer 29

Balance at the start of the year + capital introduced + profit for the year - drawings = balance at the end of the year

Question 30

Contribution per unit

Answer 30

Selling price - variable cost per unit

Question 31

Total contribution

Answer 31

Contribution per unit x number of units sold

Question 32

Total contribution 2

Answer 32

Total revenue - total variable costs

Question 33

Margin of safety

Answer 33

Actual level of output - Breakeven level of output

Question 34

Break even output

Answer 34

Fixed costs / contribution per unit

Question 35

Bust year

Answer 35

Total required for payback/ cash inflow in the bust year

Question 36

Net cash outflows

Answer 36

Cash inflows - cash outflows

Question 37

Total variance

Answer 37

Total budget amount - total actual amount

Question 38

Labour rate variance

Answer 38

(Standard rate per hour - actual rate per hour) x actual hours

Question 39

Labour efficiency

Answer 39

(Standard labour hours- actual hours) x standard rate per hour

Question 40

Material price variance

Answer 40

(Standard price per unit - actual price per unit ) x actual amount

Question 41

Material usage variance

Answer 41

(Standard amount - actual amount) x standard price

Question 42

Sales price variance

Answer 42

(Standard selling price - actual selling price) x actual units sold + = ADVERSE - = FAVOURABLE

Question 43

Sales volume variance

Answer 43

(Standard units sold - actual units sold) x standard selling price + = ADVERSE - = FAVOURABLE

Question 44

Total cost

Answer 44

Variable costs + fixed costs

Question 45

Overhead absorption rate for 1 product

Answer 45

Overheads / total production in units

Question 46

Overhead absorption rate for 2+ products

Answer 46

( Overheads / Fixed costs ) / Machine or labour hours

Question 47

Production budget

Answer 47

Budgeted sales + Budgeted closing inventory - Budgeted opening inventory = Budgeted production