FORMULAS - BM P2

Quantitative Unit Formula Unit of Formula

technique sheet measurement
(Yes/No)

Acid test Finance Yes Ratio

(Current assets – Stock) / Current
(quick) ratio
liabilities

Average costs Finance No Currency

Average costs = Total cost /
(or unit costs)
Output

or

AC = TC / Q

Average fixed Finance No Currency

Average fixed cost = Total fixed
cost (AFC)
cost / Output

or

AFC = TFC / Q

Average rate Finance Yes %

ARR = [(Total returns − Capital
of return
(ARR) cost) ÷ Years of use] / Capital cost
× 100

Average Finance No Currency

AVC = Total variable cost /
variable costs
(AVC) Quantity (output)
Balance sheet Finance No Currency
Net assets = Total equity
(what needs to
balance?)

Break-even Ops Man No N/A

BEP occurs where TC = TR on a
point
break-even chart

Break-even Ops Man No Units

Break-even quantity = Total fixed
quantity
(output) costs / Contribution per unit

or

BEQ = TFC / (P – AVC)

Capital Finance Yes Currency

Capital employed = Non-current
employed
liabilities + Equity

Cash inflows Finance No Currency

Cash inflows = Cash sales
(cash flow
forecasts) revenue + Tax refund

(include tax refund only if

applicable to the question)

Cash outflows Finance No Currency

Cash outflows = Rent +
(cash flow
forecasts) Packaging + Salaries and wages
+ Cost of sales + Heating and
lighting + Delivery

(these are from the prescribed

format, page 63)
Closing Finance No Currency
Closing balance = Opening
balance (cash
flow forecasts) balance + Net cash flow for the
month

Contribution Ops Man No Currency

Contribution per unit = Price –
per unit (unit
contribution)* Variable cost per unit

Cost of sales Finance No Currency

Cost of sales = Opening stock +
(COS)
Purchases – Closing stock

or

COS = Sales – Gross profit

Cost plus Marketing No Currency

Price = AVC + Profit margin per
pricing
(mark-up unit
pricing)

Cumulative Finance Yes Currency

Cumulative NCF = NCF in
net cash flow
(NCF) previous year(s) + NCF of current
year

Current assets Finance No Currency

Current assets = Stocks + Cash +
(balance
sheet) Debtors

Current Finance No Currency

Current liabilities = Bank overdraft
liabilities
(balance + Trade creditors + Short-term
sheet) loans
Current ratio Finance Yes Currency
Current Assets / Current Liabilities

Direct costs Finance No Currency

Clearly identifiable output-related
expenditures

Equity Finance No Currency

Equity (or total equity) = Share
(balance
sheet) capital + Retained earnings

Expenses Finance No Currency

Gross profit – Profit before interest
and tax

Fixed costs Finance No Currency

TFC = TC – TVC

Gross profit Finance No Currency

Gross profit = Sales revenue –
(income
statement) Cost of Sales

Gross profit Finance Yes Currency

GPM = (Gross profit / Sales
margin (GPM)
revenue) × 100

Gross surplus Finance No Currency

Gross surplus = Sales revenue −
(income
statement for Cost of sales
NPO)

Interquartile BMT No Integer

Interquartile range = Quartile 3 –
range
(descriptive Quartile 1
statistics)
 IQR = Q3 – Q1

Margin of Ops Man No Units

Margin of safety = Actual output –
safety
Break-even quantity

Market growth Marketing No %

Market growth= [(Total sales in
Year 2 − Total sales in Year 1) /
Total sales in Year 1] ×100

Market share Marketing No %

Market share = (Firm's sales /
Total market sales) × 100

Mean BMT No N/A

Mean average = Sum of items /
(descriptive
statistics) Number of items

Median BMT No N/A

Median average = Middle value in
(descriptive
statistics) a list of ordered numbers

Mode BMT No N/A

Modal average = Most frequently
(descriptive
statistics) occurring value in a data set

Net assets Finance No Currency

Net assets = Total assets – Total
(balance
sheet) liabilities

Net cash flow Finance No Currency

Net cash flow = Cash inflow –
(cash flow
forecasts) Cash outflow (per time period)
Net current Finance No Currency
Net current assets = Current
assets (or
working assets – Current liabilities
capital)

Net predicted BMT No Currency

Net predicted outcome =
outcome
(decision Predicted outcome – Cost of
trees) decision

Non-current Finance No Currency

Non-current assets = Property,
assets
(balance plant, and equipment +
sheet) Accumulated depreciation

Opening Finance No Currency

Opening balance = Closing
balance (cash
flow forecasts) balance of previous time period

Payback Finance No Time

Payback period = Investment cost
period (linear
method) / Contribution per month

Predicted BMT No Currency

Predicted outcome = Estimated
outcome
(decision tree) outcome × Probability

Profit Finance No Currency

Profit = (Output × Contribution per
unit) – Fixed costs

or

Profit = Gross Profit – Expenses

Prifit Ops Man No Currency
Profit = Total revenue – Total cost
(break-even
analysis)
or

Profit = [(P – AVC) × Q] – TFC

Profit before Finance No Currency

Profit before interest and tax =
interest and
tax (income Gross profit – Expenses
statement)

Profit before Finance No Currency

Profit before tax = Gross profit –
tax (income
statement) Expenses – Interest

Profit for Finance No Currency

Profit for period = Gross profit –
period (income
statement) Expenses – Interest – Tax

Profit margin Finance No Currency

Profit margin per unit = Price –
(mark-up) per
unit Average total cost

Profit margin Finance Yes %

Profit margin = (Profit before
(profitability
ratio analysis) interest and tax / Sales revenue) ×
100

Retained Finance No Currency

Retained earnings = Equity –
earnings
(balance Share Capital
sheet)
Retained profit Finance No Currency
Retained profit = Profit after
(income
statement) interest and tax – Dividends

Retained Finance No Currency

Retained surplus (income
surplus
(income statement for non-profit
statement for organization) = Surplus for period
NPO)

Return on Finance Yes %

ROCE = (Profit before interest
capital
employed and tax / Capital employed) × 100
(ROCE)

Sales revenue Finance No Currency

Sales revenue = Price × Quantity
(or Total
revenue)
or

TR = P × Q

Surplus before Finance No Currency

Surplus before interest and tax =
interest and
tax (income Gross surplus − Expenses
statement for
NPO)

Surplus before Finance No Currency

Surplus before tax = Gross
tax (income
statement for surplus − Expenses − Interest
NPO)

Surplus for Finance No Currency

Surplus for period = Gross surplus
period (income
statement for − Expenses − Interest − Tax
NPO)
Target price Ops Man No Currency
Target price = Average Fixed Cost
(break-even
analysis) + Average Variable Cost

or

Target price = AFC + AVC

Target profit Ops Man No Currency

Target profit = (Price × Quantity) –
(break-even
analysis) [Fixed cost + (Average variable
cost × Quantity)]

Target profit Ops Man No Currency

Target profit quantity = (Fixed cost
quantity
+ Target profit) / (Price – Average
Variable Cost)

Total assets Finance No Currency

Total assets = Non-current assets
(balance
sheet) + Current assets

Total costs Finance No Currency

Total cost = Total fixed costs +
Total variable costs

or

TC = TFC + TVC

Total liabilities Finance No Currency

Current liabilities + Non-current
(balance
sheet) liabilities
Total revenue Finance No Currency
Total revenue = Price × Quantity
(or total sales
revenue) sold (or P × Q)

Total variable Finance No Currency

Total variable cost = Total costs –
costs (TVC)
Total fixed cost

or

TVC = TC – TFC

Unit Ops Man No Currency

Price – Average variable cost (or
contribution
P – AVC)

Usage rate per Ops Man No Units

Usage rate per time period =
time period
(production Stocks used / Time period
planning)

Value added Marketing No Currency

Value added per unit = Price
per unit
minus Average total costs, i.e., P
– ATC

Working Finance No Currency

Working capital = Current assets
capital (or net
current assets) – Current liabilities