Quantitative Techniques and Formulae

A comprehensive set of flashcards detailing key quantitative techniques, formulas, and definitions used in business management.

Acid Test (Quick) Ratio

(Current assets – Stock) / Current liabilities.

Accumulated Depreciation

Sum of depreciation costs from previous years.

Annual Depreciation (Straight Line Method)

(Purchase cost – Residual value) / Estimated useful lifespan.

Average Cost (Unit Cost)

Total cost / Output.

Average Fixed Cost (AFC)

Total fixed cost / Output.

Average Rate of Return (ARR)

[(Total returns − Capital cost) ÷ Years of use] / Capital cost × 100.

Average Stock

(Opening stock + Closing stock) / 2.

Average Variable Costs (AVC)

Total variable cost / Quantity (output).

Balance Sheet- what to balance

Net assets = Total equity.

Break-even Point (BEP)

Occurs where TC = TR on a break-even chart.

Break-even Quantity (Output)

Total fixed costs / Contribution per unit.

Capacity Utilization Rate

(Actual output / Maximum capacity) × 100.

Capital Employed

Non-current liabilities + Equity.

Capital Productivity Rate

Total output / Capital input.or total output/ machine hours 

Cash Inflows

Cash sales revenue + Tax refund.

Cash Outflows

Rent + Packaging + Salaries and wages + Cost of sales + heating and lighting + delivery

Closing Balance

Opening balance + Net cash flow for the month.

Contribution per Unit (Unit Contribution)

Price – Variable cost per unit.

Cost of Sales (COS)

Opening stock + Purchases – Closing stock. or sales - gross profit 

Cost to Buy (CTB)

Price × Quantity.

Cost to Make (CTM)

(Average variable costs × Quantity) + Fixed costs.

Cost Plus Pricing

Price = AVC + Profit margin per unit.

Creditor Days

(Creditors / Cost of sales) × 365.

Cumulative Net Cash Flow (NCF)

NCF in previous year(s) + NCF of current year.

Current Assets

Stocks + Cash + Debtors.

Current Liabilities

Bank overdraft + Trade creditors + Short-term loans.

Current Ratio

Current Assets / Current Liabilities.

Debtor Days

(Debtors / Total sales revenue) × 365.

Defect Rate

(Defects / Output) × 100.

Depreciation Expense (Units of Use Method)

Units of production rate × Actual units produced.

Direct Costs

Clearly identifiable output-related expenditures.

Equity (Balance Sheet)

Share capital + Retained earnings.

Expenses

Gross profit – Profit before interest and tax.

Fixed Costs

TC – TVC.

Free Float (Critical Path Analysis)

EST of next task – Duration – EST of current task.

Gearing Ratio

(Non-current liabilities / Capital employed) × 100.

Gross Profit (Income Statement)

Sales revenue – Cost of Sales.

Gross Profit Margin (GPM)

(Gross profit / Sales revenue) × 100.

Gross Surplus (Income Statement for NPO)

Sales revenue − Cost of sales.

Interquartile Range

Quartile 3 – Quartile 1.

Labour Productivity Rate

Total output / Total labour input.

Labour Turnover Rate

(Number of employees leaving / Average number of employees) × 100.

Lead Time (Production Planning)

Time of delivery – Time of placing the order.

Margin of Safety

Actual output – Break-even quantity.

Market Growth

[(Total sales in Year 2 − Total sales in Year 1) / Total sales in Year 1] × 100.

Market Share

(Firm's sales / Total market sales) × 100.

Mean (Descriptive Statistics)

Sum of items / Number of items.

Median (Descriptive Statistics)

Middle value in a list of ordered numbers.

Mode (Descriptive Statistics)

Most frequently occurring value in a data set.

Net Assets (Balance Sheet)

Total assets – Total liabilities.

Net Book Value (NBV)

Original cost of asset – Accumulated depreciation.

Net Cash Flow (Cash Flow Forecasts)

Cash inflow – Cash outflow.

Net Current Assets (Working Capital)

Current assets – Current liabilities.

Net Predicted Outcome (Decision Trees)

Predicted outcome – Cost of decision.

Net Present Value (NPV)

Sum of present values – Cost of investment.

Non-current Assets (Balance Sheet)

Property, plant, and equipment – Accumulated depreciation.

Opening Balance (Cash Flow Forecasts)

Closing balance of previous time period.

Operating Income (Operating Leverage)

Gross profit − Operating expenses.

Operating Leverage

Total contribution / Profit.

Payback Period (Linear Method)

Investment cost / Contribution per month.

Predicted Outcome (Decision Tree)

Estimated outcome × Probability.

Present Value (Single Year)

Net cash flow for year × Discount factor.

Price Elasticity of Demand (PED)

% change in quantity demanded / % change in price.

Productivity Rate

(Total output / Total input) × 100.

Profit

(Output × Contribution per unit) – Fixed costs. or gross profit - expenses 

Profit (Break-even Analysis)

Total revenue – Total cost.or [(p-avc ) x q] - TFC 

Profit Before Interest and Tax (Income Statement)

Gross profit – Expenses.

Profit Before Tax (Income Statement)

Gross profit – Expenses – Interest.

Profit for Period (Income Statement)

Gross profit – Expenses – Interest – Tax.

Profit Margin (Mark-up) per Unit

Price – Average total cost.

Profit Margin (Profitability Ratio Analysis)

(Profit before interest and tax / Sales revenue) × 100.

Reorder Quantity (Production Planning)

Maximum stock level – Buffer stock.

Retained Earnings (Balance Sheet)

Equity – Share Capital.

Retained Profit (Income Statement)

Profit after interest and tax – Dividends.

Retained Surplus (Income Statement for NPO)

Surplus for period.

Return on Capital Employed (ROCE)

(Profit before interest and tax / Capital employed) × 100.

Sales Revenue (Total Revenue)

Price × Quantity.

Stock Turnover (Number of Days)

(Average stock / Cost of sales) × 365.

Stock Turnover (Number of Times)

Cost of sales / Average stock.

Straight Line Depreciation (Annual Depreciation)

(Purchase cost – Residual value) / Estimated useful lifespan.

Surplus Before Interest and Tax (Income Statement for NPO)

Gross surplus − Expenses.

Surplus Before Tax (Income Statement for NPO)

Gross surplus − Expenses − Interest.

Surplus for Period (Income Statement for NPO)

Gross surplus − Expenses − Interest − Tax.

Target Price (Break-even Analysis)

Average Fixed Cost + Average Variable Cost.

Target Profit (Break-even Analysis)

(Price × Quantity) – [Fixed cost + (Average variable cost × Quantity)].

Target Profit Quantity

(Fixed cost + Target profit) / (Price – Average Variable Cost).

Total Assets (Balance Sheet)

Non-current assets + Current assets.

Total Contribution (Break-even Analysis)

Contribution per unit × Output.

Total Costs

Total fixed costs + Total variable costs.

Total Float (Critical Path Analysis)

LFT of task – Duration of task – EST of task.

Total Liabilities (Balance Sheet)

Current liabilities + Non-current liabilities.

Total Revenue (Total Sales Revenue)

Price × Quantity sold.

Total Variable Costs (TVC)

Total cost = Total costs – Total fixed cost.

Unit Contribution

Price – Average variable cost.

Units of Production Depreciation (Depreciation per Unit)

(Cost of asset – Scrap value) / Estimated units of production.

Usage Rate per Time Period (Production Planning)

Stocks used / Time period.

Value Added per Unit

Price minus Average total costs.

Variances (Budgets)

Actual value – Budgeted value.

Working Capital (Net Current Assets)

Current assets – Current liabilities.

Absorption Costing

Method of calculating the total cost of a product by considering indirect and direct costs.