All business equations
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33 Terms
Total costs
Fixed costs + variable costs
Profit
Total revenue - total costs
Profit
Total contribution - FC
Total variable costs
VCPU x units produced
Revenue
SP per unit x units sold
Market capitalisation
No of shares x current share price
Expected value
(A x prob A) + (B x prob B)
Decision tree Net gain
Expected value - initial cost
Market share %
Sales of 1 business / total sales in market
PED
% change in quantity demanded / % change in price x 100
Labour productivity
Output in time period / number of employees
Unit costs
TCs of production / number of units produced
Capacity utilisation
Actual output / max output x 100
Return on investment %
Return £ / cost £ x 100
Gross profit
Sales revenue - cost of sales
Operating profit
Sales revenue - COS - operating expenses
Profit for the year
Operating profit - net finance costs - tax
Contribution per unit
Selling price - VC per unit
Total contribution
Total revenue - TVC
Total contribution
Contribution per unit x units produced
Break even output
Fixed costs / contribution per unit
Margin of safety
Actual output - breakeven output
Gross profit margin
Gross profit / revenue x 100
Operating profit margin
Operating profit / revenue x 100
Profit for year margin
PFY / revenue x 100
Labour turnover + retention rate
Employees leaving / average number employed x 100
Labour costs per unit
Labour costs / units of output
Return on capital employed
Operating profit / total equity + non-current liabilities x 100
Current ratio
Current assets / current liabilities
Gearing
NCL / total equity + NCL x 100
Payables days
Payables / cost of sales
Average rate of return
Net return / initial cost x 100
Receivables days
Receivables / COS x 365