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How do you calculate fixed costs?
Fixed costs + Variable costs
How do you calculate profit?
Total revenue - Total costs OR Total contribution - Fixed costs
How do you calculate market capitalisation?
Number of shares x Current share volume
How do you calculate sales revenue or turnover?
Selling price per unit × Number of units sold
How do you calculate the expected value of a decision?
Two possible outcomes - A & B = (Pay-off of A × probability of A) + (Pay-off of B × probability of B)
N.B. Probability of A + Probability of B = 1.0
How do you calculate net gain within a decision tree?
Expected value - Initial cost of decision
How do you calculate market size volume?
The quantity of goods and services produced in a particular market over a period of time usually one year
How do you calculate market size?
The total sales revenue (from selling all of the goods and services) produced in a particular market over a period of time (usually one year)
How do you calculate sales volume?
The quantity of goods and services produced by a particular business over a period of time (usually one year)
How do you calculate sales value?
The total sales revenue of a particular business over a period of time usually (one year)
How do you calculate market growth (%) in year’X?
Change in the size of the market between year (X-1) and year X/ Size of the market in year (X-1) x100
How do you calculate sales growth (%) in year’X?
Change in sales of product or business between year (X-1) and year X/ Sales of product or business in year (X-1) x100
How do you calculate market share %?
Sales of one product OR brand OR business/ Total sales in the market x100
How do you calculate price elasticity of demand?
Percentage change in quantity demanded/ Percentage change in price x100
How do you calculate added value?
Sales revenue-costs of bought-in goods and services
How do you calculate labour productivity?
Output per time period/ Number of employees
How do you calculate unit costs?
Total costs of production/ Number of units of output produced
How do you calculate capacity utilisation (%)?
Actual output in a given time period/ Maximum possible output in a given time period
How do you calculate return on investment (%)?
Return on investment (£)/ Cost of the investment (£)
How do you calculate gross profit?
Sales Revenue - Cost of Sales
How do you calculate profit from operations/ operating profit?
Sales Revenue - Cost of Sales - Operating Expenses
How do you calculate profit for the year?
Operating profit + Profit from other activities - Net finance costs -Tax
How do you calculate variance?
The difference between an actual and a budgeted figure.
Favourable variance results in profits being higher than forecast.
Adverse variance results in profits being lower than forecast
How do you calculate contribution per unit?
Selling price - Variable costs per unit
How do you calculate total contribution?
Contribution per unit × Units produced or sold
OR
Total contribution = Total revenue - Total variable costs
How do you calculate break-even output?
Fixed costs/ Contribution per unit
On a break even chart where can you find break- even output?
The level of output at which Total Revenue equals Total Costs
On a break even chart where can you find the level of profit at a given level of output?
The vertical distance between the Total Revenue line and the Total Cost line
How do you calculate margin of safety?
Actual level of output - Breakeven level of output
How do you calculate gross profit margin (%)?
Gross profit/ Sales revenue x100
How do you calculate profit from operations margin/ operating profit margin (%)?
Operating profit/ Sales revenue x100
How do you calculate profit from the year margin?
Profit for year/ Sales revenue x100
How do you calculate labour turnover (%)?
Number of staff leaving during the year/ Average number of staff employed by the business during the year x100
How do you calculate employee retention rate (%) for a particular time period?
Number of staff leaving during the year/ Average number of staff employed by the business during the year x100
How do you calculate employee costs as percentage of turnover?
Employee costs/ Sales turnover x100
How do you calculate labour costs per unit?
Labour costs/ Units of output
How do you calculate the capital employed?
Where total equity + non-current liabilities
How do you calculate return on capital employed (ROCE) (%)?
Operating profit/ Total equity + non-current liabilities x100
How do you calculate current ratio?
Current assets/ Current liabilities
How do you calculate gearing %?
Non-current liabilities/ Total equity + non-current liabilities x100
How do you calculate payable days?
Payables/ Cost of sales x365
How do you calculate receivable days?
Receivables/ Sales revenue x365
How do you calculate inventory turnover?
Cost of goods sold/ Average inventories held
How do you calculate the average rate of return %?
Net return from the project (£) or number of years/ Initial cost of the project (£) x100
Note
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