AQA Business - Formulas - Paper 1 & 2

Total costs

Total costs = total fixed costs + total variable costs

Total fixed costs

Total fixed costs = total costs - total variable costs

Total variable costs

Total variable costs = total costs - total fixed costs

Revenue

Revenue = selling price per unit × quantity sold

Profit/Loss

Profit/loss = revenue - total costs

Average unit costs

Average unit costs = total costs / output

Net cash flow

Net cash flow = total cash inflows - total cash outflows in a given period

Opening balance

Opening balance = closing balance of the previous period

Closing balance

Closing balance = opening balance + net cash flow

Break-even point from a break-even chart

Break-even point from a break-even chart: when total revenue = total costs

Profit/loss from a break-even chart

Profit/loss from a break-even chart = total revenue - total costs

Margin of safety

Margin of safety = actual or budgeted output - break-even point

Average rate of return

Average rate of return (%) = average annual profit (total profit / no. of years) x 100 / cost of investment

Gross profit

Gross profit = sales revenue − cost of sales

Gross profit margin

Gross profit margin (%) = gross profit × 100 / sales revenue

Operating profit

Operating profit = gross profit − overheads

Net profit

Net profit = gross profit − overheads, tax and interest

Net profit margin

Net profit margin (%) = net profit × 100 / sales revenue

Net current assets

Net current assets = total current assets - total current liabilities

Net assets

Net assets = non-current assets + net current assets - non-current liabilities

Total equity

Total equity = value of net assets

Market share

Market share = sales of one product or brand or business × 100 / total sales of market as a whole

Market size

Market size = the total volume of sales of a product or the total value of sales of a product