BUSINESS SL FORMULAE

acid test ratio (FB):
(Current assets − Stock) / Current liabilities

annual forecasted net cash flow:
Forecasted cash inflow − Forecasted cash outflows

average annual profit:
(Total returns − Capital cost) / Number of years

break-even level of output:
Fixed costs / Contribution per unit

break-even target price:
(Fixed costs / Production level) + Direct cost

capacity utilisation rate (FB):
(Actual output / Productive capacity) × 100

capital employed (FB):
Non-current liabilities + Equity

contribution per unit:
Selling price of a product − Direct costs per unit

creditor days (FB):
(Creditors / Cost of sales) × 365

current ratio (FB):
Current assets / Current liabilities

debtor days (FB):
(Debtors / Total revenue) × 365

defect rate (%):
(Number of defective products / Total output in time period) × 100

degree of operating leverage:
(Revenue − Total variable costs) / Operating profit

gross profit:
Sales revenue − Cost of sales

gross profit margin (%):
(Gross profit / Sales revenue) × 100

market share (%):
(Sales of business in time period / Total market sales in time period) × 100

net cash flow:
Total cash payments to a business (inflows) − Sum of cash payments made by it (outflows)

price elasticity of demand (PED):
Percentage change in quantity demanded / Percentage change in price

profit after tax:
Operating profit − Interest costs − Corporation tax

profit before interest and tax:
Gross profit − Overhead expenses

profit margin (%):
(Profit before interest and tax / Sales revenue) × 100

return on capital employed (%) (FB):
(Profit before interest and tax / Capital employed) × 100

revenue (or sales turnover):
Selling price × Quantity sold

revenue to achieve target profit:
(Fixed costs + Target profit) / (1 − Direct cost / Price)

target profit level of output:
(Fixed costs + Target profit) / Contribution per unit

total contribution:
Unit contribution × Output

units of production method:
Depreciation per unit = (Cost of asset − Residual value) / Total units produced

Annual depreciation = Depreciation per unit × Annual units produced