formulas

• total costs


  fixed costs + variable costs
• profit


  total revenue - total costs OR total contribution - fixed costs
• total variable costs


  variable costs per unit x number of units sold
• variable costs per unit

  total variable costs / number of units sold
• sales revenue or turnover

  selling price per unit x number of units sold
• market capitalisation of a business


  number of issued shares x current share price
• expected value of a decision with two possible outcomes ( A & B )


  (pay off of A x probability of A) + (pay off of B x probability of B)
• net gain ( decision tree )


  expected value - initial cost of decision
• market growth


  change in size of market / original size x 100
• sales growth


  change in sales / original sales x 100
• market share


  sales of a product or business / total market sales x 100
• operating profit margin


  operating profit / sales revenue x 100
• operating profit


  gross profit - expenses
• gross profit


  revenue - cost of sales
• profit for the year

  operating profit + profit from other activities - net finance costs - tax
• profit for the year margin

  profit for the year / sales revenue x 100
• labour turnover


  number of staff leaving / average number of staff employed x 100
• employee retention rate


  number of staff who stay throughout the year / average number of staff employed by the business during the year x 100
• employee costs as a percentage of turnover


  employee costs / sales revenue x 100
• labour costs per unit

  labour costs / units of output
• return on capital employed (ROCE)


  operating profit / capital employed ( total equity + non current liabilities ) x 100
• current ratio


  current assets / current liabilities
• gearing %


  non current liabilities / capital employed (total equity + non-current liabilities ) x 100
• payables (creditor) days


  payables / cost of sales x 365
• receivables (debtor) days


  receivables / sales revenue x 365
• inventory turnover


  cost of goods sold / average inventory held
• average rate of return %


  (net return from project (£) / number of years) / initial cost of project (£) x 100
• variance


  budgeted figure - actual figure
• how is lead time calculated ?

  level of buffer inventory - reorder level
• margin of safety


  actual level of output - break even level of output
• total contribution


  total revenue - total variable costs
• contribution per unit


  selling price - variable costs per unit
• capcity utilisation


  actual level of output / maximum level of output x 100
• return on investment


  profit from the investment / cost of investment x 100
• added value


  sales revenue - cost of bought in goods and services
• total equity


  share capital + retained profits
• break-even


  fixed costs / contribution per unit