Theme 3 calculations (business)

• 4 period moving average (example)

  1/2jan + feb + MARCH + april + 1/2may / 4 = MARCH

  (Gives averages and smoothes out any extreme fluctations)
• Balance sheet structure


  Non-current assets

  Current assets

  Current liabilities

  Net current assets.

  Noncurrent liabilities

  Net assets.

  Finance by

  Total equity
• Net current assets


  current assets - current liabilities
• Net assets


  (Non current assets + net current assets) - non-current liabilities
• Gearing %


  Non-current liabilities / Total Equity + Non-current liabilities x 100

  (Anything over 50% is bad)
• ROCE (Return On Capital Employed)


  Operating profit / total equity + non-current liabilities x 100
• Labour turnover


  Number of Employees Leaving during period / total staff x100

  (Want to be low)
• Labour retention


  number of staff staying / average number of staff x 100
• Absenteeism


  (Absent in a time period / total amount of staff) x 100

  % of staff who are absent from work
• Labour productivity


  Output per period/number of employees or a number of hours worked

  (Want this to be high)
• Cost per unit


  total cost/total number of units
• Labour cost per unit


  Total labour costs / total number of units
• Payback Period


  the amount of time for an investment to cover itself

  (Total cost = £100, year1 = £50, year2 = £40, year3 = £30.

  2years 4months payback period) (need)£10)/(total) £30) x 12)=4months)
• ARR


  Average profit / initial cost x 100

  Average profit = total profit / no. of years
• NPV


  Steps

  1) multiply net cash flow & discount factor

  2) add up all present values

  3) subtract initial outlay
• Critical path analysis


  Float = LFT - duration - EST
• Decision trees


  Expected gain = (result1 x probability1) + (result2 x probability2) - initial cost of investment
• Total equity 


  Share capital + reserves