BUSINESS EQUATIONS

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profit

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20 Terms

1

profit

revenue - costs

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2

revenue

price x quantity

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3

total costs

fixed costs + total variable costs

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4

average fixed costs

total fixed costs / quantity

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5

total variable costs

variable cost per unit x units sold

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6

average unit costs

total costs / output

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7

market share

sales of business / total sales in market x 100

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8

market growth

changes in sales / original sales x 100

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9

break-even output

fixed costs / (price - variable cost per unit)

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10

margin of safety

actual sales - break-even output

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11

net cash flow

total inflows - total outflows

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12

opening balance

closing balance of previous period

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13

closing balance

opening balance + net cash flow

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14

gross profit

revenue - cost of sales

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15

gross profit margin

gross profit / revenue x 100

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16

net profit

gross profit - expenses

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17

net profit margin

net profit / revenue x 100

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18

percentage change

new - original / original x 100

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19

changes in %

new% - old%

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20

ARR

average annual profit / cost of investment x 100

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