Theme 2 formulas

Net Cash Flow

total inflows - total outflows

Sales volume

total number of units sold over a period of time

Sales revenue

number of units sold x unit price

Total Variable Costs

number of units sold x variable cost per unit

Total costs

fixed costs + variable costs

Contribution per unit

selling price per unit - variable costs per unit

Total contribution

contribution per unit x number of units sold

Break - even

fixed costs/ contribution per unit

Margin of safety

actual output - breakeven output

Variance

actual - budget

Gross Profit

sales revenue- cost of sales

Operating profit

gross profit - overheads

net profit

operating profit- finance costs

Gross profit margin

(gross profit/ sales revenue) x 100

Operating profit margin

(operating profit/ sales revenue) x 100

Net profit margin

(net profit/ sales revenue) x 100

Current ratio

current assets/ current liabilities

Acid test ratio

(current assets - inventories) / current liabilities

Productivity (labour)

output per unit (units)/ number of employees in that time period

Capacity utilisation

(actual level of output/ maximum possible output) x 100

Average cost

total cost/ output

Working Capital(net current assets)

current assets - current liabilities

Net Assets

All assets - all liabilities