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business finance
formulas
| Term | Definition |
|---|---|
| Total Revenue | Selling price x quantity sold |
| Total costs | Fixed costs + total variable costs |
| Profit | Total revenue – total costs |
| Break even output | Fixed Costs Contribution per unit (SP – VC) |
| Contribution per unit | Selling Price per unit – Variable Cost per unit |
| Variable cost per unit | Total variable costs/ Number of units |
| Margin of safety | Actual output – break even output |
| Total contribution | CPU x quantity of units sold |
| Profit – BREAK EVEN | Total contribution – fixed costs |
| Gross Profit | Sales revenue – cost of goods sold (cost of sales) |
| Costs of good sold | Opening inventory + purchases – closing inventory |
| Operating Profit | Gross Profit – Expenses (overheads) |
| Straight line method | Cost – residual value (resale value) Expected life (years) |
| Net current assets (working capital) | Total current assets – total current liabilities |
| Net assets | Non current assets + net current assets – non current liabilities |
| Total equity | Owners/shareholders capital + retained profit - drawings |
| Gross profit margin | Gross profit x 100 Sales Revenue = % |
| Operating profit (net profit) margin | Operating profit (net profit) x 100 Sales Revenue = % |
| Mark-up | Gross profit x 100 Cost of goods sold = % |
| Return on capital employed | Operating Profit (Profit) x 100 Capital employed (total equity + non current liabilities) = % |
| Current ratio | Current assets/Current liabilities = x: 1 |
| Liquid capital ratio | Current assets - inventory/Current liabilities = x: 1 |
| Trade receivable days | Trade receivables x 365 Credit Sales = days |
| Trade payable days | Trade payables x 365 Credit purchases = days |
| Inventory turnover | Average inventory (opening + closing/2) x 365 Cost of sales = days |
Created by:
mliyeli
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