Formulas

Question 1

Total costs

Answer 1

Fixed costs + variable costs

Question 2

Profit

Answer 2

Total revenue - total costs

Question 3

Variable costs

Answer 3

Variable cost per unit X units sold

Question 4

Revenue

Answer 4

Selling price X units sold

Question 5

Market capitalisation

Answer 5

Number of issued shares X current share price

Question 6

Expected value of a decision w two possible outcomes

Answer 6

(Probability 1 X outcome 1) + (probability 2 X outcome 2)

Question 7

In a decision tree NET GAIN

Answer 7

Expected value - initial cost of investment

Question 8

Market size

Answer 8

Volume

Quantity of goods and services produced in a particular market over a period of time

Question 9

Market size value)

Answer 9

Total sales revenue generated from selling all the good and services produced in a particular market Over a period of time

Question 10

Sales volume

Answer 10

Quantity of goods and services produced by a particular business over a period of time (usually a year)

Question 11

Sales value

Answer 11

Total sales revenue of a particular business over a period of time

Question 12

Market growth (%)

Answer 12

Change in size of market between year (x-1) and year x / size of market in year (x-1) X 100

Question 13

Sales growth %

Answer 13

Change in sales of product or business between year (x-1) and year x / sales of product or business in year (x-1)

Question 14

Market share (%)

Answer 14

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

Question 15

Price elasticity if demand

Answer 15

% change in quantity demanded / % change price

Question 16

Income elasticity of demand

Answer 16

% change in quantity demanded / % change in consumer income

Question 17

Calculating percentage change

Answer 17

Find out percentage difference between two numbers then divide by original then X by 100

Question 18

Added value (value added)

Answer 18

Sales revenue - costs of bought in good and services

Question 19

Labour productivity

Answer 19

Total output / number of employees

Question 20

Unit costs

Answer 20

Total cost of production / number of units of output produced

Question 21

Capacity utilisation %

Answer 21

Actual output / maximum possible output X 100

Question 22

Return on investment %

Answer 22

Return on investment (£) / cost of investment (£) X 100

Question 23

Gross profit

Answer 23

Sales revenue - cost of sales (direct costs - materials and shop floor labour)

Question 24

Operating profit

Answer 24

Sales revenue - cost of sales - operating expenses (e.g. rent)

Question 25

Profit for year

Answer 25

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

Question 26

Variance

Answer 26

Difference between actual and budgeted figure Favourable results in profits being higher than forecasted Adverse results in profits beings lower than forecast

Question 27

Contribution per unit

Answer 27

Selling price - Variable costs per unit

Question 28

Total contribution

Answer 28

Total revenue - total variable costs OR Contribution per unit X units sold

Question 29

Break even

Answer 29

Fixed costs / contribution per units

Question 30

On a break even chart....

Answer 30

The break even level output is the level of output at which revenue = total costs

Question 31

Margin of safety

Answer 31

Actual level of output - break even level of output

Question 32

Gross profit margin (%)

Answer 32

Gross profit / sales revenue X 100

Question 33

Operating profit margin (%)

Answer 33

Operating profit / sales revenue X 100

Question 34

Profit for year margin (%)

Answer 34

Profit for year / sales revenue X 100

Question 35

Labour turnover (%)

Answer 35

Number of staff leaving during the year / average number of staff employed by the business during the year X 100

Question 36

Employee retention rate (%) for a particular time period

Answer 36

Number of employees leaving / number of employees at end of period X 100

Question 37

Employees costs as a percentage of turnover

Answer 37

Employee costs / sales turnover X 100

Question 38

Labour cost per unit

Answer 38

Labour costs / units of output

Question 39

Return on capital employed (ROCE)(%)

Answer 39

Operating profit / total equity + non current liabilities X 100

Question 40

Capital employed

Answer 40

Equity + non current liabilities

Question 41

Current ratio

Answer 41

Current assets / current liabilities

Question 42

Gearing

Answer 42

Non current liabilities / total equity + non current liabilities (capital employed) X 100

Question 43

Payable days

Answer 43

Payables / cost of sales X 365

Question 44

Receivables days

Answer 44

Receivables / revenue X 365

Question 45

Inventory turnover

Answer 45

Costs of goods sold / average inventories held To determine number of days DIVIDE by 365 Cost of sales / average inventories

Question 46

Average rate of return (%)

Answer 46

Average annual profit / investment cost X 100 Annual average profit = total net return minus the initial investment / number of years

Question 47

Net present value

Answer 47

Net return X discounter value

Question 48

Payback

Answer 48

A

Question 49

Net current assets

Answer 49

Current assets - current liabilities The working capital that a business has available

Question 50

Net assets

Answer 50

Total assets - total liabilities I The value of a business

Question 51

Total equity will always be equal to....

Answer 51

Net assets - it’s represents how a business has been financed

Question 52

Gross profit

Answer 52

Sales revenue - cost of sales

Question 53

Actual capacity (capacity utilisation top part)

Answer 53

Labour productivity (x per employee) x average number of employees

Question 54

Depeciaion

Answer 54

Cost - residual value (last) / estimated useful number of years

Question 55

Operating forfeit

Answer 55

Minus overheads from gross profit