AQA A Level Business Key Formulas and Data

These flashcards cover key formulas and definitions related to AQA A Level Business, including profit calculations, market analysis, operational metrics, and investment evaluations.

Total Costs

Total costs = Fixed costs + Variable costs.

Profit Formula

Profit = Total revenue - Total costs OR Total contribution - Fixed costs.

Total Variable Costs

Total variable costs = Variable cost per unit × Number of units sold.

Sales Revenue (Turnover)

Sales revenue or Turnover = Selling price per unit × Number of units sold.

Market Capitalisation

Market capitalisation of a business = Number of issued shares × Current share price.

Expected Value Formula

Expected value of a decision with two possible outcomes A & B = (Pay-off of A × probability of A) + (Pay-off of B × probability of B).

Net Gain

Net gain = Expected value - Initial cost of decision.

Market Size (Volume)

Market size volume is the quantity of goods and services produced in a particular market over a period of time, usually one year.

Market Size (Value)

Market size (value) is the total sales revenue generated from selling all of the goods and services produced in a particular market over a period of time (usually one year).

Added Value

Added value (value added) = Sales revenue - costs of bought-in goods and services.

Sales Value

Sales value is the total sales revenue of a particular business over a period of time, usually one year.

Price Elasticity of Demand

Price elasticity of demand measures how the quantity demanded of a good responds to a change in price.

Change in Market Size Formula

Change in the size of the market between year (X-1) and year X = Size of the market in year (X-1) - Sales of one product OR brand OR business.

Sales Growth Percentage Formula

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) × 100.

Labour Productivity

Labour productivity = Output per time period / Number of employees.

Return on Investment (ROI)

Return on investment (%) = (Net return from project (£) or number of years / Initial cost of project (£)) × 100.

Gross Profit Formula

Gross Profit = Sales Revenue - Cost of Sales.

Operating Profit Formula

Profit from Operations = Operating profit = Sales Revenue - Cost of Sales - Operating Expenses.

Variance

Variance is the difference between an actual and a budgeted figure.

Contribution Per Unit Formula

Contribution per unit = Selling price - Variable costs per unit.

Break-even Output Definition

At break-even output, Total Revenue equals Total Costs.

Margin of Safety Formula

Margin of safety = Actual level of output - Breakeven level of output.

Labour Turnover Percentage Formula

Labour turnover (%) = Number of staff leaving during the year / Average number of staff employed by the business during the year × 100.

Unit Costs Definition

Unit costs (average costs) = Total costs of production / Number of units of output produced.

Capacity Utilization Formula

Capacity utilization (%) = Actual output in a given time period / Maximum possible output in a given time period × 100.