AQA A Level Business Equations

Total costs

Fixed costs + variable costs

Profit

Total revenue - total costs

Variable costs

Variable cost per unit x number of units sold

Total revenue

Selling price per unit x number of units sold

Market capitalisation

Share price x number of shares

Net gain

Expected value - initial cost of decision

Market growth

(Change in size of market / size of market originally) x 100

Sales growth

(Change in sales amount/ sales amount originally) x 100

Market share

(Sales of one business/ total sales in the market) x 100

Price elasticity of demand

% change in quantity demanded / % change in price

Added value

Sales revenue - costs of bought in goods and services

Labour productivity

Output / number of employees

Unit cost

Total cost of production / number of units produced

Capacity utilisation

(Actual output / maximum output) x 100

Return on investment

(Monetary return on investment/ cost of investment) x100

Gross profit

Sales revenue - cost of sales

Operating profit

Sales revenue - cost of sales - operating expenses

Profit for the year

Operating profit + other profit - net finance costs - tax

Variance

Actual budget - budgeted figure

Contribution per unit

Selling price - variable cost per unit

Total contribution

Total revenue - total variable costs

Break even output

Fixed costs / contribution per unit

Margin of safety

Actual level of output - breakeven level of output

Gross profit margin

(Gross profit / sales revenue) x 100

Operating profit margin

(Operating profit / sales revenue) x 100

Profit for the year

(Profit for the year / sales revenue) x 100

Labour turnover

(Number of staff leaving / average number of staff employed) x 100

Employee retention rate

((Number of employees at end of period - number of leavers) / number of employees at end of period ) x 100

Labour cost per unti

Labour costs / units of output

ROCE

(Operating profit / (totals equity + non current liabilities)) x 100

Current ratio

Current assets/ current liabilities

Gearing

(Non current liabilities/ (total equity + non current liabilities)) x 100

Payables days

(Payables / cost of sales) x 365

Receivables days

(Receivables / sales revenue) x 365

Inventory Turnover

Cost of goods sold / average inventories held

ARR

(Net return from project / initial cost of project) x 100

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