Paper 2 Formulas

Question 1

Margin of Safety

Answer 1

Actual output- Breakeven output

Question 2

Breakeven units

Answer 2

Fixed costs
(SPPU-VCPU)

Question 3

Profit (using contribution)

Answer 3

Total contribution- fixed costs

Question 4

Contribution per unit

Answer 4

SPPU- VCPU

Question 5

Total Contribution

Answer 5

CPU x quantity sold

Question 6

Profit

Answer 6

Total revenue - total costs

Question 7

Total costs

Answer 7

Fixed costs + variable costs

Question 8

Total revenue

Answer 8

SPPU x units sold

Question 9

Closing balance

Answer 9

Opening balance + net cash flow

Question 10

Net cash flow

Answer 10

Total inflows - total outflows

Question 11

Total variable costs

Answer 11

VCPU x output

Question 12

Current Ratio

Answer 12

Current Assets
Current Liabilities

Question 13

Gross Profit

Answer 13

Revenue - cost of sales

Question 14

Operating Profit

Answer 14

Gross Profit - fixed overheads (fixed costs)

Question 15

Profit before Tax

Answer 15

Operating Profit - financing costs

Question 16

Corporation tax (%)

Answer 16

Charged on operating profit of % flat rate

Question 17

Net Profit

Answer 17

Profit before Tax - tax

Question 18

Acid Test Ratio

Answer 18

Current Assets - stock
Current Liabilities

Question 19

Gearing %

Answer 19

Non current liabilities X 100
Total equity + non current liabilities

Question 20

Breakeven using contribution

Answer 20

Fixed costs
Contribution per unit

Question 21

ROCE Ratio (%)

Answer 21

operating profit x 100
Total equity + non current liabilities

Question 22

Labour productivity

Answer 22

Total output
Number of workers

Question 23

Labour cost per unit

Answer 23

Labour costs
Output

Question 24

Labour turnover

Answer 24

Number of employees leaving x 100
Average no. of employees

Question 25

Staff retention

Answer 25

_Number of staff staying over a period of time_ x 100 Average no. of staff in past (in time period)

Question 26

Absenteeism

Answer 26

_Number of work days lost though absence_ x 100 Total possible days worked

Question 27

Average cost per unit

Answer 27

_Total production cost in time period (£)_ Total output in time period (units)

Question 28

Capacity utilisation

Answer 28

_Current output_ x 100 Maximum output

Question 29

Budget variance

Answer 29

Actual figure - budgeted figure

Question 30

Sales volume

Answer 30

_Sales revenue_ Selling price

Question 31

Gross profit margin

Answer 31

_Gross profit_ x 100 Revenue

Question 32

Operating profit margin

Answer 32

_Operating profit_ x 100 Revenue

Question 33

Net profit margin

Answer 33

_Net profit_ x 100 Revenue

Question 34

Working capital

Answer 34

Current assets - current liabilities

Question 35

Payback

Answer 35

No. of full years + _what you need_ x 12 what you get

Question 36

Average rate of return

Answer 36

_average annual profit_ x100 initial costs

Question 37

Average annual profit

Answer 37

_Total NCF - investment costs_ No. years of project

Question 38

Net Present Value

Answer 38

NCF x discount factor - then add up all years (calculated figures) (Y) - Y - investment cost