Equations

Total cost

total fixes costs + total variable costs

Total variable costs

quantity sold * cost per unit

Revenue

price * quantity

Profit

total revenue - total costs

Average Unit cost

Average Unit cost = Total costs / output

Break even point(from break even chart)

when total revenue = total costs

Profit/loss(from break even chart)

total revenue - total costs

Margin of Safety

Margin of Safety = actual/budgeted output - break even point

Net cash flow

Net cash flow = total cash inflows - total cash outflows in a given period

Opening balances

Opening balances = closing balance of the previous period

Closing balances

Closing balance = opening balance + net cash flow

Average rate of return

Average rate of return(%) = average annual profit * (total profit / number of years) * 100 / cost of investment

Gross profit

Gross profit = sales revenue - cost of sales

Operating profit

Operating profit = gross profit - overheads

Net profit

Net profit = gross profit - overheads, tax and interest

Net profit margin

Net profit margin = (net profit / sales revenue) * 100

Net current assets

Net current assets = total current assets - total current liabilities

Net assets

Net assets = non-current assets + net current assets - non-current liabilities

Total equity

Total equity = value of net assets

Market share

(sales of the product / total market sales) * 100

Market size

• number of units sold

OR

• units sold * price per unit

Market growth

change in market size (new-old) / original market size * 100