Formulas

• Break Even Formula


  Fixed costs / contribution per unit
• Market Share Formula


  Sales/Total Market Sales X 100
• Market Size Formula


  Sales of main competitor / share of the market x 100
• Contribution Per Unit


  Selling price - variable cost per unit
• Total Contribution

  Contribution per unit x number of units sold
• Profit


  Total revenue - total cost
• Sales Revenue


  Price x Quantity
• Margin of Safety Formula

  Actual sales - Break even sales
• Total Costs

  fixed costs + variable costs
• Gross Profit


  sales - cost of goods sold
• Net Profit


  Gross Profit - Expenses
• Gross Profit Margin


  Gross profit/sales revenue x 100
• Net Profit Margin


  Net profit / sales revenue x 100
• Labour Turnover Formula


  number of staff leaving / number of staff x 100
• Labour Productivity Formula


  Output / number of employees
• Absenteeism Formula


  number of employees absent/total number of employees x 100
• Capacity Utilisation Formula


  Current output/maximum possible output x 100
• Added Value


  the difference between the cost of purchasing raw materials and the price the finished goods are sold for
• Lead Time


  Time interval between ordering and receiving the order
• Economies of Scale


  Factors that cause a producer's average cost per unit to fall as output rises
• Price Elastic


  A product with demand that is highly price sensitive, so price elasticity is above -1
• Price Inelastic


  A product with demand that is not very sensitive to a change in its price, so price elasticity is less than -1
• Inferior Good


  These are goods with a negative income elasticity value, meaning as incomes rise, demand for a good fall and vice versa.
• Normal Good


  A good that consumers demand more of when their incomes increase
• Luxury Good


  A good with an income elasticity greater than +1 meaning that a rise in income causes a larger rise in demand for this type of good e.g. foreign holidays.
• Working Capital


  current assets - current liabilities
• Capital Employed


  Total equity + non current liabilities
• Price Elasticity of Demand

  % change in quantity demanded / % change in price
• Income Elasticity of Demand

  % change in quantity demanded / % change in income
• Owner's Equity


  total assets - total liabilities
• Acid Test Ratio


  Current Assets - Stock / Current Liabilities
• Current Ratio


  current assets/current liabilities (liquidity)
• Gearing Ratio


  non-current liabilities/capital employed x 100
• Return on capital employed (ROCE)

  Net profit / capital employed x 100
• Index Number Formula


  (current price/base year price) x 100
• 3 Point Moving Average

  3 period found by-

  Adding up every 3 pieces of Data, and dividing it by 3 to find the moving average
• Line of Best Fit

  A line drawn in a scatter plot to fit most of the dots and shows the relationship between the two sets of data
• Variance Analysis


  The difference between the expected values and the actual ones.
• Adverse Variance


  When costs are higher than expected or revenue is lower than expected
• Favourable Variance


  When costs are lower than expected or revenue is higher than expected