Formulas

• How do you calculate market capitalisation of a business?

  Market capitalisation = (Number of issued shares) x (Current share price)
• How do you calculate labour productivity?

  Labour productivity = (Output over a time period) / (Number of employees)
• How do you calculate unit costs?

  Unit costs = (Total costs) / (Number of units of output)
• How do you calculate capacity utilisation?

  Capacity utilisation = (Actual output) / (Maximum possible output) x 100
• How do you calculate return on investment (ROI)?

  ROI = (Operating profit) / (Capital invested) x 100
• How do you calculate gross profit?

  Gross profit = Revenue - Cost of sales
• How do you calculate operating profit?

  Operating profit = Gross profit - operating expenses
• How do you calculate profit for year?

  Profit for year = Operating profit + profit from other activities - net finance costs - tax
• How do you calculate variance?

  Variance = budgeted figure - actual figure
• How do you calculate contribution per unit?

  Contribution per unit = Selling price - variable cost per unit
• How do you calculate total contribution?

  Total contribution = Contribution per unit x units sold

  OR

  Total contribution = Total revenue - total variable costs
• How do you calculate break-even output?

  Break-even output = (Fixed costs) / (Contribution per unit)
• How do you calculate the margin of safety?

  MOS = Actual level of output - Break-even level of output
• How do you calculate labour turnover?

  Labour turnover = (Number of staff leaving) / (Number of staff employed by the business) x 100
• How do you calculate employee costs as a percentage of turnover?

  Employee costs as a percentage of turnover = (Employee costs) / (Turnover) x 100
• How do you calculate labour cost per unit?

  Labour cost per unit = (Labour costs) / (units of output)
• How do you calculate capital employed?

  Capital employed = Total equity + non-current liabilities
• How do you calculate return on capital employed (ROCE)?

  ROCE = (Operating profit) / (Capital employed) x 100
• How do you calculate current ratio?

  Current ratio = (Current assest) / (Current liabilties)
• How do you calculate gearing?

  Gearing = (Non-current liabilities) / (Capital employed) x 100
• How do you calculate payables days?

  Payables days = (Payables) / (Cost of sales) x 365
• How do you calculate recievables days?

  Recievables days = (Recievables) / (Revenue) x 365
• How do you calculate inventory turnover?

  Inventory turnover = (Cost of sales) / (Average inventories held)
• How do you calculate average rate of return (ARR)?

  ARR = (Average annual return) / (Initial cost of project) x 100