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 costs + variable costs

Question 4

profit

Answer 4

total revenue - total costs
OR
total contribution - fixed costs

Question 5

market capitalisation of a business

Answer 5

number of issued shares x current share price

Question 6

net gain

Answer 6

expected value - initial cost of decision

Question 7

expected value of a decision with two possible outcomes

Answer 7

(pay off of a x probability of a) + (pay off of b x probability of b)

Question 8

market growth (%)

Answer 8

change in the size of the market over a period / original size of the market x 100

Question 9

market share (%)

Answer 9

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

Question 10

added value

Answer 10

sales revenue - costs of bought-in goods and services

Question 11

labour productivity

Answer 11

output over a period of time / number of employees

Question 12

unit costs (average costs)

Answer 12

total costs / number of units of output

Question 13

capacity utilisation (%)

Answer 13

actual output / maximum possible output x 100

Question 14

return on investment (%)

Answer 14

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

Question 15

gross profit

Answer 15

revenue - cost of sales

Question 16

operating profit (profit from operations)

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 / revenue x 100

Question 19

operating profit margin (%)

Answer 19

operating profit / revenue x 100

Question 20

profit for year margin (%)

Answer 20

profit for year / revenue x 100

Question 21

variance

Answer 21

budgeted figure - actual figure

Question 22

contribution per unit

Answer 22

selling price - variable costs per unit

Question 23

total contribution

Answer 23

contribution per unit x units sold
OR
total revenue - total variable costs

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

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

Question 27

employee retention rate for a specific time period (%)

Answer 27

number of employees who remained with the business for the whole period of time / number of employees at start of the time period x 100

Question 28

employee costs as percentage of turnover

Answer 28

employee costs / turnover x 100

Question 29

labour costs per unit

Answer 29

labour costs / units of output

Question 30

return on capital employed (ROCE) (%)

Answer 30

operating profit / total equity + non current liabilities x 100 OR capital employed = where total equity + non current liabilities

Question 31

current ratio

Answer 31

current assets / current liabilities

Question 32

gearing (%)

Answer 32

non current liabilities / total equity + non current liabilities x 100

Question 33

payable days

Answer 33

payables / cost of sales x 365

Question 34

receivables days

Answer 34

receivables / revenue x 365

Question 35

inventory turnover

Answer 35

cost of sales / average inventories held

Question 36

average rate of return (%)

Answer 36

average annual return (£) / initial cost of project (£) x 100