formulas

• revenue

  selling price x no. of units sold
• variable costs

  variable cost per unit x no. of units sold
• Total costs

  Fixed Costs + Variable costs
• Profit

  Revenue - Total Costs

  Total Contribution - Fixed Costs
• Market Capitalisation

  number of issued shares x current share price
• Expected value of a decision with 2 possible outcomes

  (pay-off A x probability A) + (pay-off B x probability B)
• net gain

  expected value - initial cost of decision
• market growth (%)

  change in size of market / original size of market x100
• market share (%)

  sales of one product / total sales in market x100
• added value

  sales revenue - cost of bought in goods and services
• Unit costs

  Total costs / output
• Capacity Utilisation (%)

  actual output / maximum possible output x100
• return on investment (%)

  profit from investment / cost of investment x100
• gross profit

  revenue - cost of sales
• Operating Profit

  gross profit - operating expenses
• Profit for year

  operating profit + profit from other activities - net finance costs - tax
• gross profit margin (%)


  gross profit / revenue x 100
• Operating profit margin (%)

  Operating profit / revenue x 100
• Profit for the year margin (%)

  profit for the year / revenue x 100
• variance

  budgeted figure - actual figure
• contribution per unit

  selling price - variable cost per unit
• Total contribution

  contribution per unit x no. of units sold
• break-even output

  fixed costs / contribution per unit
• Margin of safety

  actual level of output - break-even level of output
• Price Elasticity of Demand

  % change in demand / % change in price
• Income Elasticity of Demand

  % change in demand / % change in income
• Labour Productivity

  output per period / no. employees at work

  labour hours per week / units produced per week
• net current assets

  current assets - current liabilities
• Re-order Quantity

  max inventory - buffer stock
• Re-order level

  (lead time x average use) + buffer
• net cash flow

  total inflows - total outflows
• closing balance

  opening balance + net cash flow
• absenteeism

  no. staff absent during period / no. employed during period x100
• average number of staff

  (no. staff beginning of year + no. staff end of year) / 2
• Return on capital employed (%)

  Operating or net profit / total equity + non-current liabilities X100
• Inventory Turnover (times per year)

  Cost of Sales/Inventories
• Payable Days

  Trade Payables/ cost of sales x365
• Receivable days

  Trade receivables / revenue x365
• Debt-Equity ratio (%)

  Debt / Equity x100
• Gearing ratio (%)


  Non-current liabilities / total equity + non-current liabilities x100