Business Equations

• Break Even

  Fixed Costs/Contributions Per Unit
• Contribution

  Revenue - Variable Costs
• Contribution Per Unit

  Revenue Per Unit-Variable Costs Per Unit
• Margin Of Safety

  Actual Output - Break even level of output
• Net Gain (Decision Tree)

  Expected value - initial cost of investment
• Labour Productivity

  Output over a period / Number of Employees
• Capacity Utilisation (%)

  Actual Output / Maximum Possible Output (x100)
• Return on Investment

  Profit from Investment / Cost of Investment (x100)
• Gross Profit Margin

  Gross Profit / Revenue (x100)
• Variance

  Budgeted Figure - Actual Figure
• Labour Turnover

  Number of Staff Leaving / Number of staff employed (x100)
• Employee retention rate

  Number of Staff who stayed whole time / Number at start (x100)
• Employee costs as a percentage of turnover

  Employee costs / Turnover (Revenue) (x100)
• Return on Capital Employed

  Operating Profit / (Assets + Liabilities)
• Gearing

  Non Current Liabilities / Total Equity + Non Current liabilities (x100)
• Payables days

  ( Payables / Cost of Sales ) x 365
• Recievables Days

  Recievables / Revenue (x365)
• ARR (Average Rate of Return)

  Average Annual Return / Initial cost (x100)