Year 1 & 2 Formulas

Question 1

What’s the formula for Revenue (Sales or Turnover) ?

Answer 1

Selling price per unit × Number of units sold

Question 2

What’s the formula for Variable Costs (Total variable costs) ?

Answer 2

Variable cost per unit × Number of units sold

Question 3

What’s the formula for Total Costs ?

Answer 3

Fixed costs + Variable costs

Question 4

What are the two formulas for Profit ?

Answer 4

Total revenue − Total costs OR
Total contribution − Fixed costs

Question 5

What is the formula for Market Capitalisation ?

Answer 5

Number of issued shares × Current share price

Question 6

What is the formula for Expected Value ?

Answer 6

(Pay-off of A × probability of A) + (Pay-off of B × probability of B)

Question 7

What is the formula for Market Growth (%) ?

Answer 7

( Change in the size of the market over a period
/ Original size of the market ) × 100

Question 8

What is the formula for Market Share (%) ?

Answer 8

( Sales of one product OR brand OR business /
Total sales in the market ) × 100

Question 9

What is the formula for Added Value ?

Answer 9

Sales revenue − costs of goods or services

Question 10

What is the formula for Labour Productivity ?

Answer 10

Output over a time period / Number of employees

Question 11

What is the formula for Unit Costs (average costs) ?

Answer 11

Total costs / Number of units of output

Question 12

What is the formula for Capacity Utilisation (%) ?

Answer 12

( Actual output / Maximum possible output ) × 100

Question 13

What is the formula for Return on Investment (%) ?

Answer 13

( Profit from the investment / Cost of the investment ) × 100

Question 14

What is the formula for Gross Profit ?

Answer 14

Revenue − Cost of Sales

Question 15

What is the formula for Operating Profit ?

Answer 15

Gross profit − Operating Expenses

Question 16

What is the formula for Profit for the Year ?

Answer 16

Operating profit + Profit from other activities − Net finance costs − Tax

Question 17

What is the formula for Gross Profit Margin (%) ?

Answer 17

( Gross profit / Revenue ) × 100

Question 18

What is the formula for Operating Profit Margin (%) ?

Answer 18

( Operating profit / Revenue ) × 100

Question 19

What is the formula for Profit for the Year Margin (%) ?

Answer 19

( Profit for year / Revenue ) × 100

Question 20

What is the formula for Variance?

Answer 20

Budgeted figure – actual figure

Question 21

What is the formula for Contribution Per Unit ?

Answer 21

Selling price − Variable costs per unit

Question 22

What are the two formulas for Total Contribution ?

Answer 22

Contribution per unit x NO. units sold
OR
Total revenue - Total variable costs

Question 23

What is the formula for Break-even Output ?

Answer 23

Fixed costs / Contribution per unit

Question 24

What is the formula for Margin of Safety ?

Answer 24

Actual level of output − Break-even level of output

Question 25

What is the formula for **Labour Turnover** ?

Answer 25

( Number of staff leaving / Number of staff employed by the business ) × 100

Question 26

What is the formula for **Employee retention rate *(%)*** ?

Answer 26

( Number of employees who remained with the business for the whole period of time / Number of employees at start of the time period ) ×100

Question 27

What is the formula for **Employee costs as percentage of turnover** ?

Answer 27

( Employee costs / Turnover ) × 100

Question 28

What is the formula for **Labour Cost Per Unit** ?

Answer 28

Labour costs / Units of output

Question 29

What is the formula for **Return on capital employed *(ROCE)(%)***

Answer 29

( Operating profit / Total equity + non-current liabilities ) × 100

Question 30

What is the formula for **Current Ratio** ?

Answer 30

Current assets / Current liabilities

Question 31

What is the formula for **Gearing** ?

Answer 31

( Non-current liabilities / Total equity + non-current liabilities ) ×100

Question 32

What is the formula for **Payables Days** ?

Answer 32

( Payables / Cost of sales ) × 365

Question 33

What is the formula for **Receivables Days** ?

Answer 33

( Receivables / Revenue ) × 365

Question 34

What is the formula for **Inventory Turnover** ?

Answer 34

Cost of sales / Average inventories held

Question 35

What is the formula for **Average rate of return *(%)***

Answer 35

( Average annual return / Initial cost of project ) × 100