UNIT 3 BUSINESS STUDIES FORMULA Flashcards
(28 cards)
Basics:
TOTAL REVENUE
quantity sold x selling price per unit
TOTAL VARIABLE COSTS
quantity sold x variable costs per unit
TOTAL COSTS
fixed costs + total variable costs
PROFIT OR LOSS
total revenue - total costs
Cash Flow:
NET CASH FLOW
total inflows - total outflows
CLOSING BALANCE
net cash flow + opening balance
Break-even:
TOTAL CONTRIBUTION
sales revenue - total variable costs OR contribution per unit x quantity sold
TOTAL VARIABLE COSTS
variable costs per unit x quantity
MARGIN OF SAFETY
actual sales - break even level of output
MAKING A BREAK-EVEN CHART
1) calculate the contribution per unit (selling price per unit - variable cost per unit)
2) Fixed costs / contribution per unit - break even in units
Statement of comprehensive income:
SALES REVENUE
quantity sold x selling price per unit
COST OF GOODS SOLD
opening inventories + purchases - clsoing inventories
GROSS PROFIT
sales revenue - costs of goods sold
NET PROFIT
gross profit - total expenses + revenue income
Statement of financial position:
NET CURRENT ASSETS (WORKING CAPITAL)
current assets - current liabilities
STRAIGHT-LINE DEPRECIATION
(historic cost - residual value) / expected life
NET ASSESTS
(non-current assets + current assets) - (current liabilites + long term liabilities)…all assets - all liabilites!
CAPITAL EMPLOYED
capital + retained prodit - drawings
Profitability Ratio (all in %):
GROSS PROFIT MARGIN
gross profit / revenue x 100
MARK-UP
gross profit / cost of goods sold x 100
NET PROFIT MARGIN
net profit / revenue x 100
RETURN ON CAPITAL EMPLOYED
(ROCE)
net profit (before interest and tax) / capital employed x 100
Liquidity ratios (all in the form of x:1)
CURRENT RATIO
current assets / current liabilites : 1
LIQUID CAPITAL RATIO
current assets - inventory / current liabilities :1
