BUSINESS FORMULAS

THEME 1

Market Share

Total Sales of Business / Total sales in market x 100

Price Elasticity of Demand

% Change in quantity demanded / % Change in price

Income Elasticity of Demand

% Change in quantity demanded / % Change in income

% Mark Up (Cost - Plus Pricing)

Unit cost + mark up

Unit Cost

Total costs / Number of units

THEME 2

Sales Volume

Sales Revenue / Selling Price

Sales Revenue

Selling Price x Sales Volume

Total Variable Costs

Average Variable Costs x Quantity Sold per unit

Total Costs

Total Variable Costs + Total Fixed Costs

Total Revenue

Quantity Sold x Average Selling Price

Net Cash Flow

Inflows - Outflows

Profit [or Loss]

Total Sales - Total costs

Profit Margin

Profit / Sales Revenue x 100

Net Cash Flow

Total Cash Inflow - Total Cash Outflow

Opening Balance

Closing Balance from previous period

Closing Balance

Opening Balance + Net Cash Flow

Break Even

Fixed Costs / (Selling Price per Unit - Variable Costs per Unit [aka Contribution])

Contribution per Unit

Selling Price per Unit - Variable Cost per Unit

Total Contribution

Contribution per Unit x Quantity sold

Margin of Safety

Actual Sales - Break Even level of Sales

Gross Profit

Sales Revenue - Cost of Sales

Operating Profit

Gross Profit - Expenses

Net Profit

Operating Profit - interest OR tax

Gross Profit Margin

Gross Profit / Sales Revenue x 100

Operating Profit Margin

Operating Profit / Sales Revenue x 100

Net Profit Margin

Net Profit / Sales Revenue x 100

Current Ratio

Current Assets / Current Liabilitis : 1

Acid Test Ratio

Current Assets - Inventory / Current Liabilities

Variance

Actual Figures - Budgeted Figures