IB Business Management HL - Finance Equations

(3.2) Total Revenue

Price per unit x quantity sold

(3.3)Contribution per unit

price per unit - variable cost per unit

(3.3)Total contribution (with revenue)

total revenue - total variable cost

(3.3)Total contribution (with CPU)

contribution per unit x number of units sold

(3.3)Profit (Break even analysis)

total contribution - total fixed costs

(3.3)Break-even chart

Total revenue = total costs

(3.3)Margin of Safety

current output - break even output

(3.3)Break even quantity

fixed costs / contribution per unit

(3.3)Target profit output

(FC + Target profit) / contribution per unit

(3.3)Break-even revenue

(FC / contribution per unit) x price per unit

(3.4)Gross profit (Trading Account)

sales revenue - cost of sales

(3.4)Cost of sales

opening stock + purchases - closing stock

(3.4)Net profit before interest and tax

Gross profit - expenses

(3.4)Net profit before tax

(gross profit - expenses) - interest

(3.4)Net profit after interest and tax

((gross profit - expenses) - interest) - corporation tax

(3.4)Retained profit

(((gross profit - expenses) - interest) - corporation tax) - dividends

(3.4)Working capital

total current assets - total current liabilities

(3.4)Total assets less current liabilities

(FC + current assets) - current liabilities

(3.4)Net assets

((FC + current assets) - current liabilities) - long term liabilities

(3.4)Equity

Equity = share capital + retained profit

(3.4)Equity(overall)

Net Assets

(3.4)Annual depreciation (straight-line method

(original cost - residual value) / (expected useful life of asset)

(3.4)Net book value in Year 1 (reducing-balance depreciation)

cost of original asset - (cost of original asset x rate of depreciation%)

(3.4)Depreciation rate

SEE NOTES PÉDÉ

(3.5)Gross profit margin

gross profit / sales revenue

(3.5)Net profit margin

(Net profit before interest and tax / sales revenue) x 100

(3.5)Capital employed

long term liabilities + share capital + retained profit

(3.5)Return on capital employed

(net profit before interest and tax / capital employed) x 100

(3.5)Current ratio

current assets / current liabilities

(3.5)Acid test ratio

(current assets - stock) / current liabilities

(3.6)Stock turnover ratio (# of times)

cost of goods / average stock

(3.6)Average stock

(opening + closing stock) / 2

(3.6)Stock turnover ratio ( # of days)

(average stock / cost of goods) x 365

(3.6)Debtor days ratio (# of days)

(debtors / total sales revenue) x 365

(3.6)Creditor days ratio (# of days)

(creditors / cost of goods sold) x 365

(3.6)Gearing ratio

(loan capital / capital employed) x 100

(3.7)Working capital

current assets - current liabilities

(3.7)Closing cash balance

net cash flow + opening cash balance

(3.8)Payback period

initial investment cost / annual cash flow from investment

(3.8)Exact payback time (month)

(extra cash flow required / annual cash flow in yr 4) x 12 months

(3.8)Average rate of return

(((total returns - capital cost) / years of usage) / capital cost)) x 100

(3.8)Net present value

total present values - original cost