Business studies formulae

• Percentage change


  (New-Old)/ Old x 100
• Market growth


  (Change in size of market over a time period/ original size of market) x 100
• Market share


  (Sales revenue of one firm/ Total market revenue) x 100
• PED


  %Change in quantity demanded/% Change in price
• YED


  %Change in quantity demanded/% change in income
• Total revenue


  Selling price x quantity
• Total variable costs


  Variable cost per unit x quantity
• Total costs

  Total fixed costs + Total variable costs
• Net cashflow


  Total inflows - Total outflows
• Opening balance


  Closing balance from the previous month
• Closing balance


  Opening balance + Net cashflow
• Contribution per unit


  Selling price per unit- Variable cost per unit
• Breakeven output


  Total fixed costs / Contribution per unit
• Total contribution


  Contribution per unit x quantity
• Margin of safety

  Actual or forecasted output - Breakeven output
• Variance


  Actual figure - budgeted figure. This figure can be either favourable, which is when the budgeted is more than the actual costs, or Adverse, which is where the actual costs are more than the budgeted
• Gross profit margin


  (Gross profit/ sales revenue) x 100
• Operating profit margin


  (Operating profit / Sales revenue) x 100
• Net profit margin


  (Net profit / Sales revenue) x 100
• Gross profit


  Revenue - Cost of sales
• Operating profit


  Gross profit- Operating expenses
• Net profit 


  Operating profit - Net interest
• Current ratio


  Current Assets / Current liabilities. The optimum current ratio is 1.5:1
• Acid test ratio


  (Current assets- stock) / Current liabilities. The optimum acid test ratio figure is 1:1
• Productivity

  Total output in time period / Number of inputs (Employees or machinery)
• Capacity utilisation


  (Actual output / Maximum possible output) x 100. The ideal figure is 85-90% to allow for maintenance, training or surges in demand
• Gearing


  (Non current liabilities / Capital employed) x 100
• Capital employed


  Non current liabilities + Total equity
• Return on capital employed

  (Operating profit / Capital employed ) x 100
• Average rate of return

  1. Total net cashflow - investment= Profit 2. Profit / No. of years of life of project 3. Answer to (2) to do the following equation: (Average annual return / Initial investment) x 100
• Net present value (NPV)

  1. Data will be in a table and any initial investment will be in year 0 2. Calculate the net cashflow for each year 3. Apply the relevant discount factor for each year 4. Add up the sum of the discount factors to reach NPV
• Critical path analysis: Float time

  LFT - duration - EST
• Labour turnover

  (No. of employees leaving in time period / No. of employees in business) x 100
• Absenteeism rate

  ( No. of workers absent in time period / Total no. of workers in time period ) x 100
• Cost per unit

  Total costs/ Quantity produced
• Labour cost per unit

  Total labour costs / Quantity produced
• Net current assets

  Current assets - Current liabilities
• Net assets

  Non current assets + Net current assets - Non current liabilities
• Total equity

  Share capital + Reserves
• Stock control diagram