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Cash Flow and Breakeven Formulas Guide

This document provides formulas and calculations for cash flow, breakeven analysis, income statements, balance sheets, and financial ratios. It defines key terms like net cash flow, total revenue, total costs, gross profit, operating profit, depreciation methods, assets, liabilities, and equity. Formulas are given for calculating breakeven point, contribution, margin of safety, gross profit margin, return on capital employed, current ratio, and inventory turnover.

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607 views6 pages

Cash Flow and Breakeven Formulas Guide

This document provides formulas and calculations for cash flow, breakeven analysis, income statements, balance sheets, and financial ratios. It defines key terms like net cash flow, total revenue, total costs, gross profit, operating profit, depreciation methods, assets, liabilities, and equity. Formulas are given for calculating breakeven point, contribution, margin of safety, gross profit margin, return on capital employed, current ratio, and inventory turnover.

Uploaded by

has cho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
  • Formulas - Cash Flow & Breakeven
  • Breakeven Point & Contribution
  • Formulas - Income Statement
  • Statement of Financial Position
  • Financial Ratios
  • Measuring Efficiency

FORMULAS – CASH FLOW & BREAKEVEN

CASH FLOW
Net Cash Flow = Cash Inflow – Cash Outflow
Closing Balance = Opening balance + Net Cash Flow
Closing balance = Opening balance next month

BREAKEVEN ANALYSIS

BREAKEVEN
TC = TR or
FC + TVC = TR
TC = Total Cost
TR = Total Revenue
FC = Fixed Cost
TVC = Total Variable Cost

Calculations for TR, TC

TR = P x Q
TR= Total Revenue
P = Price
Q = Quantity

TC = FC + TVC
TC = Total Cost
FC = Fixed Cost
TVC = Total Variable Cost

Profit = TR – TC
CONTRIBUTION
Contribution per unit = Selling price per unit – Variable cost per unit

Total Contribution = Total Revenue – Total Variable Cost

Total Contribution = (Selling price x quantity) – (Variable cost per unit x


quantity)

BREAKEVEN POINT

Fixed Cost

Contribution

Fixed Cost

SP – VC

SP = Selling price per unit


VC = Variable cost per unit

MARGIN OF SAFETY

Actual output level – breakeven level of output


FORMULAS – INCOME STATEMENT

INCOME STATEMENT

Gross Profit = Sales revenue – cost of sales

Cost of goods sold = Opening inventory + purchases –

closing inventory

Operating Profit / Net Profit = Gross profit – expenses

Profit for the year = Operating profit/ Net Profit –


interest

DEPRECIATION
Straight-line – an asset’s value is reduced by the same
amount each year
• Value of asset – residual value (resell value)
life of the asset

Value of asset = Asset purchase price


Residual value = Resell value

Reducing balance – an asset’s value is reduced by a set


percentage of the net book value each year
THE STATEMENT OF FINANCIAL POSITION

Total Assets = Current Assets + Non-Current / Fixed

Assets

Net Current Assets / Working Capital = Total Current

Assets – Total Current Liabilities

Net Assets = Total Assets – Total Liabilities

Total Liabilities = Current Liabilities + Non-Current /

Long term Liabilities

Total Shareholder’s Equity = Share/ opening capital +

Retained Earnings (Retained profit, Transfer of profit)

Annual Depreciation = Asset purchase price – estimated

end of life value / estimated useful life of asset


RATIOS
Measuring Profitability:
Gross profit margin: Gross profit x 100
Revenue

Profit margin (or operating profit margin): Operating Profit x 100


Revenue

Mark-up: Gross profit x 100


Cost of sales

Return on Capital Employed (ROCE):

Capital employed = total equity + non-current liabilities

ROCE : Operating profit x 100


Total equity + non-current liabilities

Measuring Liquidity:

Current ratio:
Current assets
Current liabilities

Liquid capital ratio:

Current assets - inventories


Current liabilities
Measuring Efficiency:

Trade receivable days:

Trade receivables x 365


Credit sales

Trade payable days:

Trade payable x 365


Credit purchases

Inventory Turnover:

Average inventory x 365


Cost of sales

Average inventory = opening inventory + closing inventory


2

FORMULAS – CASH FLOW & BREAKEVEN CASH FLOW Net Cash Flow = Cash Inflow – Cash Outflow Closing Balance = Opening balance
CONTRIBUTION Contribution per unit = Selling price per unit – Variable cost per unit Total Contribution = Total Revenue
FORMULAS – INCOME STATEMENT INCOME STATEMENT Gross Profit = Sales revenue – cost of sales Cost of goods sold = O
THE STATEMENT OF FINANCIAL POSITION Total Assets = Current Assets + Non-Current / Fixed Assets Net Current Assets /
RATIOS Measuring Profitability: Gross profit margin: Gross profit x 100
Measuring Efficiency: Trade receivable days: Trade receivables x 365 Credit sales Trade payable days: T

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