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business finance

formulas

TermDefinition
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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