Business Formulas
5.0(1)
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46 Terms
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Revenue
price x quantity sold
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Total Costs
fixed costs + variable costs
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Gross Profit
sales revenue - cost of goods sold
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Profit
total revenue - total costs
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Net Profit
gross profit - all other expenses (total costs)
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Break-Even
fixed costs / contribution per unit
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Contribution
selling price - variable costs
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Total equity/Shareholders funds
share capital + reserves
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Capital employed
share capital + retained earnings + long term borrowings
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Depreciation
original cost -residual value/useful life
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ROCE
operating profit/capital employed x 100
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Operating profit
gross profit - operating expenses
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Current ratio
current assets/current liabilities
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Acid test ratio
(current assets -inventory)/current liabilities
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Gearing Ratio
non-current liabilities/capital employed x 100
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Gross profit margin
gross profit/sales revenue x 100
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Net profit margin
operating profit/sales revenue x 100
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Market Growth
change in size of market / original size x 100
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Market Share
sales of one product or business/total sales in market x 100
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Variable Costs
variable cost per unit x number of units sold
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Margin of Safety
actual level of output - breakeven level of output
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Net Cash Flow
total inflows - total outflows
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Closing Balance
opening balance + net cash flow
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Opening Balance
closing balance from previous month
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Retained Profit
net profit - tax and dividends
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Absenteeism
total number of staff absence annually/total number of working days they should have worked x 100
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Labour Productivity
output per time period / number of employees
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Labour Turnover
number of staff leaving / average number of staff employed x 100
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Added Value
price that the product or service is sold at - cost of producing the product
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Capital Productivity
output/capital employed
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Capacity Utilisation
actual level of output / maximum possible output x 100
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Index Numbers
value in period/value in base period x 100
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Price Elasticity of Demand
% change in quantity demanded / % change in price
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Income Elasticity of Demand
% change in quantity demanded / % change in income
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3 point moving average
3 adjacent figures/3
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Variance
budgeted figure - actual
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Working Capital
current assets - current liabilities
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Expected Value
calculated by multiplying the estimated financial effect by its probability
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Net Gain
add the expected value of each outcome and deduct the costs associated with the decision
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EST
EST of previous activity + duration of previous activity (work from left to right)
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LFT
LFT at the end of following activity - duration of following activity (work from right to left
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Float Time
LFT at end of task - duration of task - EST at start of task
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Payback
cost of initial investment / net cash earned per time period
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ARR (%)
average annual profit/cost of investment x 100
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Total Contribution
contribution per unit × units sold
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DCF/NPV
\-multiply each year's net cash flow by the discount rate for the year
\-total the discounted net cash flows and then subtract the initial investment
\-total the discounted net cash flows and then subtract the initial investment