unit 3 business formulas

• Net Cash Flow

  total cash inflow - total cash outflow
• Closing Balance

  opening balance + net cash flow
• Total Revenue

  selling price x quantity sold
• Total Cost

  fixed costs + total variable costs
• Profit

  total revenue - total cost
• Total Contribution


  sales revenue - total variable cost
• Contribution ( per unit )


  selling price - variable cost ( per unit )
• Profit ( using contribution )

  contribution per unit x margin of safety
• Break-even Output


  total fixed costs/unit contribution
• Margin of Safety


  actual sales - break-even level of output
• Revenue

  unit price x quantity sold
• Gross Profit

  sales revenue - cost of good sold
• Cost of Goods Sold

  opening inventory + purchases - closing inventory
• Profit / Loss for the year


  Gross profit - expenses + other income
• Net Book Value

  cost - depreciation
• Net Current Assets


  current assets - current liabilities
• Net Assets

  non current assets + net current assets - long term liabilities
• Capital Employed


  Opening capital + profit for the year less drawings
• Balance sheet

  net assets= capital employed
• Gross Profit Margin

  Gross profit/sales revenue x 100
• Mark-up

  Gross profit / cost of sales x 100
• Profit Margin

  Profit/Revenue x 100
• Return on Capital Employed


  Operating profit / capital employed x 100
• Current Ratio

  current assets / current liabilities
• Liquid Capital Ratio


  (Current Assets - Inventory) / Current Liabilities
• Trade Receivable Days

  Trade receivables / credit sales x 365
• Trade Payable Days

  Trade payable / credit purchases x 365
• Inventory turnover

  Average inventory / cost of sales x 365