BUSINESS EQUATIONS

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20 Terms

1
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profit

revenue - costs

2
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revenue

price x quantity

3
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total costs

fixed costs + total variable costs

4
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average fixed costs

total fixed costs / quantity

5
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total variable costs

variable cost per unit x units sold

6
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average unit costs

total costs / output

7
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market share

sales of business / total sales in market x 100

8
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market growth

changes in sales / original sales x 100

9
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break-even output

fixed costs / (price - variable cost per unit)

10
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margin of safety

actual sales - break-even output

11
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net cash flow

total inflows - total outflows

12
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opening balance

closing balance of previous period

13
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closing balance

opening balance + net cash flow

14
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gross profit

revenue - cost of sales

15
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gross profit margin

gross profit / revenue x 100

16
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net profit

gross profit - expenses

17
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net profit margin

net profit / revenue x 100

18
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percentage change

new - original / original x 100

19
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changes in %

new% - old%

20
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ARR

average annual profit / cost of investment x 100