Business Studies AS & A Levels: Formulas

Market Capitalization.

= current share price x tot. no. of shares issued

Market share.

% of sales in the total market sold by a business.

= (tot. sales of bus. / tot. sales of industry) x 100

OR

= (firm's sales in time period / tot. market sales in time period) x 100

Equilibrium price.

demand = supply

Mean.

Sum of all results / no. of results

Ex: table - 2,3,5,7,2,6

Sum = 25

No. of results = 6

25 / 6 = 4.16

Mode.

The value that occurs the most frequently

ex: 2,3,6,2,5,7,9,2,3,1

In this case...the repetitive value is 2.

Median.

1stly, always put the values in ascending (AO)/descending (DO) order!

Ex: Odd No. of values given (put in AO)

= (No. of values + 1) / 2

2,5,6,1,5,7,8,2,7,9,10,4,3,4,3 (15 values)

--> 1,2,2,3,3,4,4,5,5,6,7,7,8,9,10 = (15+1) / 2 = 8

The median value is 8th value. = 5

Ex: Even No. of values (Put in AO)

= No. of values / 2

3,6,7,5,10,3,8,4,1,6,1,9,4,2 (14 Values)

--> 1,1,2,3,3,4,4,5,6,6,7,8,9,10 = 14 / 2 = 7

the median value is the 7th value = 4

Price elasticity of demand (PED).

= % change in quantity demanded / % change in price.

Ex:

% Change in demand = 10

% Change in price = 25

PED = 10 / 25 = 0.4q

(A LvL) Labor productivity.

Output per worker in a given time period.

= Tot. output in time period (ex, 1 year) / Tot. staff employed.

(A LvL) Absenteeism.

% of workforce absence as a portion of the employee total.

= (No. of staff absent / Tot. no. of staff) x 100

(A LvL) Labor turnover.

% of employees leaving the organization/business in a given time period.

= (No. of staff leaving in 1 year) / Average No. of staff employed) * 100

(A LvL) Income elasticity of demand.

The responsiveness of demand for a product followed by a change in consumer incomes.

= % Change in demand for product / % Change in consumer incomes

(A LvL) Promotional elasticity of demand.

The responsiveness of demand for a product followed by a change on spent amount promoting it.

= % Change in demand for product / % Change in promotional spending

(A LvL) Cross elasticity of demand.

The responsiveness of demand for a product followed by a change in the price of another product.

= % Change in demand for product A / % Change in demand for product B

(A LvL) Capacity utilization.

The rate of maximum output capacity being achieved.

= (Current output lvl / max. output lvl) x 100

Contribution per unit.

= Selling price (SP) - variable cost per unit

Break-even lvl of output.

= Fixed costs / contribution per unit

(A LvL) Unit Cost.

= Tot. cost of production / No. of units produced

Sales revenue/sales turnover (SR/ST).

= Selling price x quantity sold

Gross profit (GP).

= Sales revenue (SR) - cost of sales (CoS)

Net profit (NP).

= GP - Overheads

Pre-tax profits (Profit before tax).

= NP - Interest

Profit after tax.

= Pre-tax profits - Tax

Retained profits (RP).

= Profit after tax - Dividends.

Gross profit margin.

= (GP / SR) x 100

Net profit margin.

= (NP / SR) x 100

Current ratio.

= Current assets / Current liabilities

Liquid assests.

= Current assets - Inventories/Stocks

Acid-test ratio.

= Liquid assets / Current liabilities

(A LvL) Straight-line depreciation.

= (Original costs of assets - Expected residual value) / Expected useful life of asset (years)

(A LvL) Capital employed.

= [(Non-current assets + current assets) - Current OR Non-current liabilities] + Shareholder's equity

(A LvL) Return on capital employed (%).

= (NP or operation profit / Capital employed) x 100

(A LvL) Inventory (stock) turnover ratio.

= CoG sold / Value of inventories

(A LvL) Day's sales in receivables ratio.

= Accounts receivable x 365 / SR

(A LvL) Account's receivable turnover ratio.

= SR / Trade receivables

(A LvL) Dividend per share.

= Tot. annual dividends / Tot. No. of issued shares

(A LvL) Dividend yield ratio (%).

= (Dividend per share x 100) / Current share price

(A LvL) Dividend cover ratio.

= Profit after tax and interest / annual dividends

(A LvL) Earnings per share.

= Profit after tax / Tot. No. of shares

(A LvL) Price/Earnings ratio.

= Current share price / Earnings per share

(A LvL) Gearing ratio.

= (Long-term loans / Capital employed) x 100

OR

= (Non-current liabilities x 100) / (Shareholder's equity + Non-current liabilities.

(A LvL) Interest cover.

= Operating profit (Before tax & interest) / Paid annual interest

(A LvL) Annual forecast net cash flow.

= Forecast cash inflow - Forecast cash outflow

(A LvL) Payback period.

= (Additional net cash inflow NEEDED / Annual cash flow in the 1st positive cash flow year) x 12 (for months) OR 365 (for days)

(A LvL) Average rate of return (ARR).

= (Annual profit (Net cash flow) / Initial capital cost) * 100

There are 4 stages to calculate this...REMEMBER!

1. Add up all POSITIVE cash flows

2. Subtract INITIAL cost of investment

3. Divide it by lifespan

4. Multiply by 100 for %

(A LvL) Discounted cash flow (DCF).

the sum of the cash flow in each period divided by one plus the discount rate (WACC) raised to the power of the period number

(A LvL) Net present value (NPV).

= [(Net cash flow x Discount factors) + Discounted cash flows] - Capital costs

(A LvL) Initial rate of return (IRR)

Used mostly on spreadsheet software.

Graph wise...need to research more. :/ Sorry.