Paper 2 business calculations

• Average Costs Per Unit

  Total Production Costs ÷ Total Output (Units)
• Net Present Value


  Cash flow x Discount Factor (Predicted rate of Inflation)
• Average Rate of Return


  Net Return (Profit per annum) ÷ Capital Outlay Cost (start cost) x 100
• Payback Period


  Costs of Project (Investment) ÷ Net Cash Flow Generated x 12
• Revenue


  Selling Price x Units Sold
• Gross Profit


  Revenue - Cost of Sales
• Operating Profit


  Gross Profit - Expenditure
• Profit After Tax


  Operating Profit - Financial costs/Taxes
• Gearing


  Non-current Liabilities ÷ (Total Equity + Non-current Liabilities) x 100
• Acid Test Ratio


  (Current Assets - Inventories) ÷ Current Liabilities
• Current Ratio


  Current Assets ÷ Current Liabilities
• Gross Profit Margin


  Gross Profit ÷ Revenue x 100
• Net Profit Margin


  Net Profit ÷ Revenue x 100
• Return On Capital Employed

  (Operating Profit ÷ Total Equity) + Non-current Liabilities x 100
• Labour Productivity


  Output in period (units) ÷ Number of Employees Working
• Labour Retention


  Staff not leaving per year ÷ Average Number of Staff x 100
• Labour Turnover


  Number of Employees leaving during the period ÷ Average number employed during the period x 100
• Absenteeism


  Number of days of unauthorised absence ÷ Total Days worked by workforce over the period x 100
• Total Float Time


  LFT - EST - Duration of Activity
• Contribution per unit


  Price per unit - variable cost per unit
• Break even point


  Fixed costs / contribution per unit (SP-VC)
• Sales volume


  Sales revenue / selling prices
• sales revenue


  price x quantity
• variable costs


  total variable costs x quantity produced
• total costs


  fixed costs + variable costs