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Business Formula

Key Business Formulas

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
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 Current assets - Current liabilities
Net assets Non current assets + net current assets – non current liabilities
Total equity Owners/shareholders capital + retained profit - drawings
Fixed Costs Total Costs – Total Variable Costs
Total Variable Costs Total Costs – Fixed Costs
Retained Profit (Profit for end of year) Net Profit – Tax and Interest
Net Cash Flow Total Cash In – Total Cash Out
Closing Balance Net Cash Flow + Opening Balance
Selling Price Total Revenue/Number of Units Sold
Profit Contribution per unit x Number sold above break even point
Budget Variance Actual Figure – budgeted figure
Labour Productivity Output per time period/Number of employees at work
Capacity Utilisation Actual output x 100/Maximum possible output
Absenteeism Rate Total Number absent per period x 100/Average number employed per period
Labour Turnover Total Number of employees leaving per period x 100/Average number of employees per period
Labour Retention Rate Total number of employees remaining per period x 100/Average number of employees per period
Average Rate of Return Average annual profit* x 100/Investment cost To work out Average annual Profit = Total Returns – Investment cost/Project life
Net Present Value NPV = Total discounted returns – investment cost
Created by: durquhart1
Popular Business sets




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