Business calculations

Total costs

Total fixed costs + total variable costs

variable costs

cost of one unit * quantity produced

Revenue

price * quantity sold

break even point in units

fixed costs / (sales price - variable cost of one sale)

Break even point in costs / revenue

break even point in units * sales price

margin of safety

actual or budgeted sales - break-even sales

interest(on loans) %

(total repayment - borrowed amount)/borrowed amount *100

net cash flow

cash inflows - cash outflows (over a given period)

opening balance

closing balance of previous period

closing balance

opening balance + net cash flow

profit/ loss

total revenue - total costs

gross profit

sales revenue - cost of sales

gross profit margin

gross profit/sales revenue *100

net profit

gross profit - other operating expenses and interest

net profit margin

net profit / sales revenue *100

average rate of return

(total profit / number of years)/ cost of investment *100

percentage growth

increase in size / original size * 100

gross profit

sales revenue - cost of sales

operating profit

gross profit - expenses

interest

(total repayment - borrowed amount)/ borrowed amount * 100

What does a break even diagram look like

What does a bar gate stock diagram look like

What do the parts on a bar gate diagram mean?

• max stock level - the maximum capacity a business has for storage. If they exceed this they won’t have any space to keep the stock which risks them having to throw it out which loses them money

• min stock level - also known as buffer stock, it is the minimum the business should store so they can meet customer demand if there are any problems like delays with the suppliers

• re-order level - the level of stock in the business when they should reorder. This should be at the point where, by the time the stock arrives, the business should be at their buffer stock

• lag time/lead time - the time between the reorder level and the time the stock arrives