IB Business Management: Formulas that are not in the booklet
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46 Terms
Current assets =
Stock + Cash + Debtors
Contribution per unit =
Price - Average Variable Cost
Cost to buy =
Price * Quantity
Current Liabilities =
Overdraft + Tax + Dividends + Creditors
Closing balance in a clash flow =
Opening balance + Net Cash flow
Total Costs =
total fixed costs + total variable costs
Profit =
total revenue - total cost
OR
Total contribution - total fixed costs
Cost of goods sold =
Opening stock + Purchases - closing stock
Average cost =
Total costs / Output level
Cost to make =
Total fixed costs + (Average variable costs * quantity)
OR
Total fixed costs + Total variable costs
Gross profit =
Sales revenue - costs of goods sold
Capital employed =
Loan capital + share capital + retained profit
OR
internal sources of finance + external sources of finance
Break-even quantity =
Total fixed costs / unit contribution
Labour productivity =
Total output / number of workers
Labour turnover =
(number of staff leaving / total number of staff) * 100
Straight line annual depreciation =
purchase cost / useful lifespan
net profit =
Gross Profit - Expenses
Absenteeism =
(number of absent staff / total number of staff) * 100
Average costs =
Total costs / output
average fixed costs =
total fixed costs / quantity
average variable cost =
total variable cost / quantity
Buffer stock =
(max. daily usage max. lead time) - (average daily usage average lead time)
cost to buy =
Price * Quantity
cost to make =
Variable costs * Quantity
current liabilities =
Trade payables + short term loans + current portion of long term loans + notes payable + accrued expenses + prepaid revenues + other short term debts
Declining Balance Depreciation =
(cost of an asset - residual value) / useful life of an asset
lead times =
supply delay + reordering delay
margin of safety =
Total Sales - Break Even Sales
market share =
(total own sales revenue/total industry sales revenue) * 100
net assets =
total assets - total liabilities
net cash flow =
cash inflow - cash outflow
net current assets
current assets - current liabilities
Net profit before interest and tax =
Gross Profit - Expenses
opening balance =
Closing balance of previous period
payback period =
investment required / annual net cash inflow
reducing-balance annual depreciation =
asset book value * depreciation rate (%)
re-order level =
(maximum daily usage rate * lead time) + safety stock
re-order quantity =
Average Daily Usage x Average Lead Time
straight line annual depreciation =
(historic cost − residual (scrap) value) / estimated life of the asset
target profit =
net sales revenue - (variable costs + fixed costs)
target price =
(total costs + target profit) / output
variances analysis =
actual amount incurred - corresponding budgeted
working capital =
current assets - current liabilities
equity =
Assets - Liabilities
Return on capital employed (ROCE)
(Operating profit / capital employed) * 100
Profitability =
Net profit / Sales Revenue