EQUATIONS YOU NEED TO

KNOW
THEME  ONE THEME  TWO
MARKET  SHARE  =  SALES  OF  A  BUSINESS X100 SALES  VOLUME  = SALES  REVENUES
TOTAL  SALES  IN  THE  MARKET PRICE

PED  =  %  CHANGE  IN  QUANTITY  DEMANDED SALES  REVENUE  = PRICE  X  QUANTITY

%  CHANGE  IN  PRICE

YED  =  %  CHANGE  IN  QUANTITY  DEMANDED TOTAL  COSTS  = FIXED  COSTS  +            

%  CHANGE  IN  INCOME VARIABLE  COSTS

TOTAL  VARIABLE  = TOTAL  COSTS  –

FIXED  COSTS
BREAKEVEN  = TOTAL  FIXED  COSTS
CONTRIBUTION  PER  UNIT
TOTAL  VARIABLE  = AVERAGE  
VARIABLE  X  OUTPUT

CONTRIBUTION  = SELLING  PRICE  –

VARIABLE  COST  PER  UNIT
AVERAGE  VARIABLE  =  VARIABLE  COSTS
OUTPUT
TOTAL  CONTRIBUTION  = CONTRIBUTION  
PER  UNIT  X  NUMBER  UNITS  SOLD
PROFIT  = TOTAL  REVENUE  – TOTAL  
COSTS
MARGIN  OF  SAFETY= TOTAL  OUTPUT  –
BREAKEVEN  POINT
NET  PROFIT  = OPERATING  PROFIT  –
INTEREST/TAX
GROSS  PROFIT  = SALES  REVENUE  –
COST  OF  SALE
NP  MARGIN  =  NET  PROFIT X100
SALES  REVENUE
GP  MARGIN  =  GROSS  PROFIT X100
SALES  REVENUE
CURRENT  RATIO  =  CURRENT  ASSETS
CURRENT  LIABILITUES
OPERATING  PROFIT  = GROSS  PROFIT  –
EXPENSES

ACID  TEST  RATIO  =  CURRENT  ASSETS  -­‐ STOCK

OP  MARGIN  =  OPERATING  PROFIT X100 CURRENT  LIABILITUES
SALES  REVENUE

CAPITAL  PRODUCTIVITY  =  OUTPUT  PER  TIME  PERIOD

WORKING  CAPITAL= CURRENT  ASSETS  – NO.  MACHINES
CURRENT  LIABILITIES

CAPACITY  UTILISATION  =  ACTUAL  OUTPUT  X100

PRODUCTIVITY  =  OUTPUT  PER  TIME  PERIOD
MAXIMUM  OUTPUT
INPUT  PER  TIME  PERIOD

LABOUR  PRODUCTIVITY  =  OUTPUT  PER  TIME  PERIOD

NO.  WORKERS/HOURS  WORKED
THEME  THREE

GEARING  RATIO  =  NON-­‐CURRENT  LIABILITIES X100

CAPITAL  EMPLOYED

LABOUR  PRODUCTIVITY  =  OUTPUT  PER  TIME  PERIOD

ROCE  RATIO  =  OPERATING  PROFIT X100 NO.  WORKERS/HOURS  WORKED
CAPITAL  EMPLOYED

LABOUR  TURNOVER  =  NO.  EMPLOYEES  LEAVING X100

CAPITAL  EMPLOYED  =  TOTAL  EQUITY  +   AVERAGE  NO.  EMPLOYEES
NON-­‐CURRENT  LIABILITIES

ABSENTEEISM  =  NO.  WORK  DAYS  LOST  THROUGH  ABSENCE X100

TOTAL  POSSIBLE  DAYS  WORKED