finance formulas

• Turnover (Revenue) =Selling Price x Quantity Sold
• Profit =Total Revenue – Total Costs
• Total Costs= Fixed Costs + Variable Costs
• Contribution=Selling Price – Variable Costs
• Break-Even = (Fixed Costs / Contribution per unit) (Contribution = Selling Price – Variable Costs)
• Net Cash FlowNet Cash Flow = Total Inflow – Total Outflow
• How to calculate closing balance Closing Balance Definition: Cash remaining in a business at the end of a month. Calculation: Closing Balance = Opening Balance + Net Cash Flow
• About Profit and Loss Accounts (income statements) Profit and Loss Accounts Definition: A financial statement showing a business’ sales revenue and costs and thus its profit or loss over a period of time. Sales Revenue (minus) Cost of Goods Sold (equals) Gross Profit (minus) Expenses (equals) Net Profit.
• Gross Profit & Gross Profit Margin formula Gross Profit: The profit made before expenses have been paid. Calculation: Total Revenue – Costs of Goods Sold Gross Profit Margin: The gross profit expressed as a percentage of sales. It is calculated using the formula: Gross Profit Margin = (Gross Profit / Sales) × 100
• Net Profit & Net Profit Margin Formula Net Profit: The final profit made by a business after all costs have been paid. Calculation: Gross Profit - Expenses Net Profit Margin: The net profit expressed as a percentage of sales. It is calculated using the formula: Net Profit Margin = (Net Profit / Sales) × 100
• Margin of safety= output - break even sales
• opening balance= closing balance of the previous month
• cost of sales= (opening stock + purchases) - closing stock
• average profit= total net profit/ no. of years of investment
• average rate of return = average profit/initial investment x 100