Business theme 2

• Net cash flow


  Total inflows - Total outflows
• Closing balance


  Opening balance + Net cash flow
• Sales revenue


  Number of units sold x Unit price
• Total fixed costs


  Total cost - Total variable costs
• Total variable costs


  Number of units sold x Variable cost per unit
• Total costs


  Fixed costs + Variable costs
• Break-even point


  Fixed costs ÷ Contribution per unit
• Contribution per unit


  Selling price per unit - Variable cost per unit
• Total contribution


  Contribution per unit x Number of units sold
• Margin of safety


  Current output - Break-even output
• Variance


  Budget figure - Actual figure
• Gross profit


  Sales revenue - Cost of sales
• Cost of sales


  Sales revenue - Gross profit (OR opening stock + purchases + closing stock)
• Operating profit


  Gross profit - Expenses
• Profit for the year (Net profit)


  Operating Profit +/- Finance costs
• Gross profit margin


  (Gross profit ÷ Sales revenue) x 100
• Operating profit margin


  (Operating profit ÷ Sales revenue) x 100
• Profit for the year (Net profit) margin


  (Profit for the year ÷ Sales revenue) x 100
• Current ratio


  Current assets ÷ Current liabilities
• Acid test ratio


  (Current assets - stock) ÷ Current liabilities
• Working capital


  Current Assets - Current liabilities
• Productivity (labour)


  Output per period (units) ÷ Number of employees
• Capacity utilisation


  (Actual level of output ÷ Maximum possible output) x 100
• To change £s into foreign currency

  multiply by the exchange rate
• To change foreign currency back to £s

  divide by the exchange rate