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Key Business Formulas

        Help!  

Term
Definition
Total Revenue   Selling price x quantity sold  
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Total costs   Fixed costs + total variable costs  
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Profit   Total revenue – total costs  
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Break even output   Fixed Costs/Contribution per unit (SP – VC)  
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Contribution per unit   Selling Price per unit – Variable Cost per unit  
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Variable cost per unit   Total variable costs/ Number of units  
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Margin of safety   Actual output – break even output  
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Total contribution   CPU x quantity of units sold  
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Gross Profit   Sales revenue – cost of goods sold (cost of sales)  
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Costs of good sold   Opening inventory + purchases – closing inventory  
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Operating Profit   Gross Profit – Expenses (overheads)  
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Straight line method   Cost – residual value (resale value)/Expected life (years)  
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Net current assets   Current assets - Current liabilities  
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Net assets   Non current assets + net current assets – non current liabilities  
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Total equity   Owners/shareholders capital + retained profit - drawings  
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Fixed Costs   Total Costs – Total Variable Costs  
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Total Variable Costs   Total Costs – Fixed Costs  
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Retained Profit (Profit for end of year)   Net Profit – Tax and Interest  
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Net Cash Flow   Total Cash In – Total Cash Out  
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Closing Balance   Net Cash Flow + Opening Balance  
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Selling Price   Total Revenue/Number of Units Sold  
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Profit   Contribution per unit x Number sold above break even point  
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Budget Variance   Actual Figure – budgeted figure  
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Labour Productivity   Output per time period/Number of employees at work  
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Capacity Utilisation   Actual output x 100/Maximum possible output  
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Absenteeism Rate   Total Number absent per period x 100/Average number employed per period  
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Labour Turnover   Total Number of employees leaving per period x 100/Average number of employees per period  
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Labour Retention Rate   Total number of employees remaining per period x 100/Average number of employees per period  
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Average Rate of Return   Average annual profit* x 100/Investment cost To work out Average annual Profit = Total Returns – Investment cost/Project life  
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Net Present Value   NPV = Total discounted returns – investment cost  
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Created by: durquhart1
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