Business Finance Formulas

E & F Formulas for Business Finance

Net cash flow

Total Cash Inflow - Total Cash Outflow

Closing balance

Opening balance + Net cash flow

Total revenue

Selling price x quantity sold

Total costs

Fixed costs + Variable costs

Profit

Total revenue - total costs

Total contribution

Total revenue - total variable costs

Contribution (per unit)

Selling price per unit - variable cost per unit

Profit (using contribution)

Contribution per unit x margin of safety

Break—even output

Total fixed costs/Unit contribution

Margin of safety

Actual Sales - break even level of output

Revenue

Unit price x quantity sold

Gross profit

Sales revenue - costs of goods sold

Costs of goods sold

Opening inventory + purchases - closing inventory

Profit/loss for the year

Gross profit - expenses + other income

Net book value

Cost - deprecation

Net current assets

current assets - current liabilities

Capital employed

Opening capital + Profit for the Year less drawings

Balance sheet (what needs to balance?)

Capital employed

Gross profit margin

Gross profit/revenue x 100

Mark-up

Gross profit/Costs of sales x 100

Profit margin

Profit/revenue x 100

Return on capital employed

Profit/Capital employed x 100

Current ratio

Current assets/current liabilities

Liquid capital ratio

Current assets - inventory/current liabilities

Trad receivable days

Trade receivables/credit sales x 365

Trade payable days

Trade payables/credit purchases x 365

Inventory turnover

Average inventory/cost of sales x 365