IB Business Management SL - Finance Formula Sheet

A collection of key financial terms and formulas relevant to IB Business Management SL.

Total Contribution

Total Revenue minus Total Variable Costs.

Contribution per Unit

Selling Price minus Average Variable Cost.

Break-even Point (units)

Fixed Costs divided by Contribution per Unit.

Target Profit Output

(Fixed Costs plus Target Profit) divided by Contribution per Unit.

Break-even Price

Total Cost divided by Output.

Price for Target Profit

(Total Cost plus Profit Target) divided by Output.

Margin of Safety

Current Output minus Break-even Output.

COGS

Cost of Goods Sold: Opening Stock plus Purchases minus Closing Stock.

Gross Profit

Sales Revenue minus COGS.

Net Profit before Interest and Tax (NPBIT)

Gross Profit minus Expenses.

Net Profit before Tax (NPBT)

NPBIT minus Interest.

Net Profit after Interest and Tax (NPAIT)

NPBT minus Tax.

Gross Profit Margin

(Gross Profit divided by Sales Revenue) times 100.

Net Profit Margin

(Net Profit before Interest and Tax divided by Sales Revenue) times 100.