Formulae

• What is the formula for total costs (TC)?

  • Total Costs (TC) = Total Fixed Costs (TFC) + Total Variable Costs (TVC)
• How are variable costs defined?

  Cost of one unit x Quantity produced
• What is the formula for revenue?

  • Revenue = Price x Quantity
• What is the formula for break-even point in units?

  • Break-even point in units = Fixed costs / (Sales price - Variable costs)
• What does the margin of safety represent?

  Actual or budgeted sales - Break-even sales
• How is interest on loans expressed as a percentage?

  Interest (%) = (Total repayment - Borrowed amount) x 100
• What is the formula for net cash flow?

  • Net cash flow = Cash inflows (receipts) - Cash outflows (payments)
• What is the formula for opening balances?

  • Opening balance = Closing balance of the previous period
• What is the formula for closing balances?

  • Closing balance = Opening balance + Net cash flow
• What is the formula for profit or loss?

  • Profit/Loss = Total revenue - Total costs
• What is gross profit defined as?

  • Gross profit = Sales revenue - Cost of sales
• How is gross profit margin calculated?

  • Gross profit margin (%) = Gross profit x 100
• What is net profit defined as?

  • Net profit = Gross profit - Other operating expenses and interest
• How is net profit margin calculated?

  • Net profit margin = Net profit / Sales revenue
• What is the formula for net profit margin?

  Net profit margin = Net profit / Sales revenue
• What is the formula for net profit?

  Net profit = Gross profit - Other expenses
• How do you calculate gross profit margin?

  Gross profit margin = Gross profit x 100
• What is the formula for gross profit?

  Gross Profit = Sales Revenue - Cost of Sales
• How is gross profit margin calculated?

  Gross Profit Margin (%) = Gross Profit x 100 / Sales Revenue
• What is the formula for net profit?

  Net Profit = Gross Profit - Other Operating Expenses and Interest
• How is net profit margin calculated?

  Net Profit Margin (%) = Net Profit x 100 / Sales Revenue
• What is the formula for average rate of return?

  Average Rate of Return (%) = Average Annual Profit / Number of Years x 100
• What does percentage growth measure?

  Percentage growth measures increase in size
• What is the formula for percentage growth?

  Percentage Growth = Increase in Size x 100 / Original Size
• What are the key components of gross profit and net profit calculations?

  • Gross Profit = Sales Revenue - Cost of Sales
  • Net Profit = Gross Profit - Other Operating Expenses and Interest
• What are the formulas for calculating profit margins?

  • Gross Profit Margin (%) = Gross Profit x 100 / Sales Revenue
  • Net Profit Margin (%) = Net Profit x 100 / Sales Revenue
• What are the formulas for calculating average rate of return and percentage growth?

  • Average Rate of Return (%) = Average Annual Profit / Number of Years x 100
  • Percentage Growth = Increase in Size x 100 / Original Size