contribution per unit =

selling price - variable cost per unit

fixed cost/ contribution per unit

actual output -break even output

contribution per unit x number of units sold

percentage change in profit =

current years profit - previous years profit/ previous pears profit x 100

number of units sold x selling price per unit

total variable costs =

variable cost per unit x number of units sold

Market capitalization =

number of shares x price of the shares

Market capitalization / share price

% change in demand / %change in price

under 1 1 more than 1 price elasticity meaning

under 1 - inelastic (less responsive, change in demand is less than change in price) 1 - change in demand = change in price more than 1 = elastic change in demand is more than the change in price

Income elasticity of demand (YED) =

% change in quality demanded / change in income

normal good normal luxury inferior good

labour productivity =

total output / number of employees

capacity utilization =

actual output/maximum output x 100

number of staff leaving / average number of staff x 100

labour productivity =

output per time period / number of employees

employee costs as a % of turnover =

employee costs / sales turnover x 100

number of employees serving for more than 1 year / average no. of staff x 100

Expected value of a decision with two possible outcomes e.g. A + B =

[pay-off of A x probability of A] + [Pay-off of B x probability of B]

expected value -initial cost of decision

change in the size of the market over a period/original size of the market x 100

Sales of one product or brand or business/ total sales in the market x 100

sales revenue - costs of bought in goods and services

Current level of output=

total contribution/contribution per unit

fixed costs/ contribution per unit

Equity (retained profit+ share capital) + non-current liabilities

Current assets/current liabilities

If the current ratio is less than 1?

such as 0.5:1 then the business might struggle to pay its short term debts

non-current liabilities/ total equity + non-current liabilitiesx100

What would a highly geared business look like?

highly geared= more than 50% of its capital in the form of loans -they are vulnerable to increases in interest rates

inventory turnover ratio=

cost of goods sold/ average inventories held

The lower the number of inventory ratio turnover ....

-the more efficient the business is -ratio only relevant to manufacturers -turnover rate determined by the nature of the product

Interpret receivables days ratio

-The short the period the easier the firm will find it to meet its short-term cash needs -However business that offer trade credit will experience long payment periods

Interpreting payables days ratio

-The longer the period the easier the firm will find it to meet its short-term cash needs -However businesses that delay payments to suppliers or creditors may damage the business relationship and this may cause problems when making future deals

Current assets-inventory/current liabilities

Operating profit/ capital employed x100

3.1 -10 ALL BUSINESS EQUATIONS Flashcards

Student preview

51 questions

Show all answers

1.

FLASHCARD QUESTION

Front

Return on investment (ROI) =

Back

Operating profit (return) / capital invested x 100

2.

FLASHCARD QUESTION

Front

profit =

Back

revenue - total costs

3.

FLASHCARD QUESTION

Front

gross profit =

Back

sales revenue -cost of sales

4.

FLASHCARD QUESTION

Front

operating profit =

Back

gross profit - expenses

5.

FLASHCARD QUESTION

Front

profit of the year =

Back

operating profit - interest and taxation

6.

FLASHCARD QUESTION

Front

sales revenue =

Back

quantity sold x selling price

7.

FLASHCARD QUESTION

Front

closing balance =

Back

opening + net cash flow

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