Formulas

Question 1

What is the formula for Added Value?

Answer 1

Added Value = Selling Price - Cost of Raw Materials

Question 2

How is Market Share calculated?

Answer 2

Market Share = Sales of business/Sales of Industry × 100

Question 3

What is the formula for Market Capitalization?

Answer 3

Market Capitalization = Current share price x total no of shares Issued

Question 4

Define Income Elasticity of Demand.

Answer 4

Income Elasticity of Demand = % Change in Demand / % Change in Income

Question 5

What does a negative Income Elasticity indicate?

Answer 5

Inferior Good

Question 6

What does a positive Income Elasticity indicate?

Answer 6

Branded good

Question 7

What does a low positive Income Elasticity indicate?

Answer 7

Necessity

Question 8

How is Labour productivity calculated?

Answer 8

Labour productivity = Total output in time period / Total staff employed

Question 9

What is the formula for Absenteeism percentage?

Answer 9

Absenteeism (%) = No of staff absent / Total no. of staff x 100

Question 10

How is Labour turnover calculated?

Answer 10

Labour turnover = No of staff leaving in 1 year x 100 / Average number of staff employed

Question 11

What is the formula for the size of each section in a PIE chart?

Answer 11

Size of each section = Value of one section / Total value of all sections x 360 degrees

Question 12

Define Mean in the context of averages.

Answer 12

Mean = sum of results / No of results

Question 13

How is the Median calculated for an odd number of observations?

Answer 13

Median for ODD No of Observations = No of values + 1 / 2

Question 14

How is the Median calculated for an even number of observations?

Answer 14

Median for EVEN No of Observation = No of values / 2

Question 15

What is the formula for Range?

Answer 15

Range = Highest values - lowest value

Question 16

What is Mark up pricing?

Answer 16

Selling price = Total Cost + Mark up %

Question 17

Define Target pricing.

Answer 17

Target pricing involves working out total cost and expected returns

Question 18

What is the formula for Promotional Elasticity of demand?

Answer 18

Promotional Elasticity of demand = % A in demand / % A in promotional spending

Question 19

How is Cross elasticity of demand calculated?

Answer 19

Cross elasticity of demand = % A in demand of good A / % A in price of good B

Question 20

What is the formula for Productivity?

Answer 20

Productivity = Output / Input

Question 21

Define Capital productivity.

Answer 21

Capital productivity = Total output per time period / Average value of capital employed

Question 22

How is Capacity utilization calculated?

Answer 22

Capacity utilization = Current output level / Maximum output level × 100

Question 23

What is the formula for Total Cost?

Answer 23

Total Cost = Total variable cost + total fixed cost

Question 24

How is Total variable cost calculated?

Answer 24

Total variable cost = Per Unit Variable Cost x No of units sold

Question 25

What is the formula for Total revenue?

Answer 25

Total revenue = selling price x no of units sold

Question 26

Define Contribution Margin.

Answer 26

Contribution Margin = P/Unit Selling Price - P/U Variable Cost

Question 27

How is Total contribution calculated?

Answer 27

Total contribution = Per unit contribution x No of Units

Question 28

What is the formula for Breakeven in units?

Answer 28

Breakeven = Fixed cost / (Selling Price - Variable Cost)

Question 29

How is Breakeven value calculated?

Answer 29

Breakeven (value) = B.E units x Selling Price

Question 30

What is the formula for Profit?

Answer 30

Profit = Total Revenue - total cost

Question 31

What is the formula for Gross profit?

Answer 31

Gross profit = Sales revenue - Cost of Goods sold (COGS)

Question 32

How is Net profit calculated?

Answer 32

Net profit = Gross Profit - Expenses (Overheads)

Question 33

What is the Gross Profit margin (%)?

Answer 33

Gross Profit margin (%) = Gross Profit / Sales Revenue × 100

Question 34

What is the Current Ratio?

Answer 34

Current Ratio = Current Assets / Current Liabilities

Question 35

Define Quick ratio / Acid Test Ratio.

Answer 35

Quick ratio = (Current assets - stocks) / Current liabilities

Question 36

What is the formula for Straight line Depreciation?

Answer 36

Straight line Depreciation = (Historical cost - scrap value) / Expected life in years

Question 37

What is Net realizable value?

Answer 37

Net realizable value = Final Selling Price - Expenses incurred to bring an asset in saleable condition

Question 38

How is Return on capital employed calculated?

Answer 38

Return on capital employed = Net profit × 100 / Capital Employed

Question 39

What is the formula for Inventory (Stock) turnover?

Answer 39

Inventory turnover = Cost of goods sold / Average inventories

Question 40

What is the Dividend Yield Ratio (%)?

Answer 40

Dividend Yield Ratio (%) = Dividend per share / Current share price x 100

Question 41

How is Payback month calculated?

Answer 41

Payback month = Additional net cash to complete investment / Annual Cash flow x 12

Question 42

What is the formula for Net present value?

Answer 42

Net present value = Present value of total cash inflows - Present value of cash outflows

Question 43

Define Expected value.

Answer 43

Expected value = Expected revenue x probability

Question 44

What is the formula for Adverse Budget Variance?

Answer 44

Adverse Budget Variance = Actual Cost - Budgeted Cost

Question 45

What is the formula for Favourable Budget Variance?

Answer 45

Favourable Budget Variance = Budgeted Cost - Actual Cost