A-Level Business Formulas

market size = number of units sold x price

market share = sales/total market sales x 100

market growth = change in size of market/original size

%inc = new - old/old x 100

%dec = old - new/new x 100

elasticity = % change in supply/% change in price

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

YED = % change in quantity demanded/% change in income

gross profit = revenue - cost of sales

operating profit = gross profit - overheads

net profit = operating profit - interest - tax - exceptional items

profit margin = profit/sales revenue x 100

current ratio = current assets/current liabilities

acid test (quick ratio) = current assets - inventories/current liabilities

working capital = current assets - current liabilities

productivity = total output/number of employees

capacity utilisation = current output/maximum output x 100

payback = cash still to be recovered/cash generated in the next year x 12

ARR = average profit/initial cost x 100

capital employed = total equity - non-current liabilities

ROCE = operating profit/capital employed x 100

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