IB BUSINESS FORMULAS
Sales of 1 product
Market share= x 100
Total market share
Market growth=Change∈¿ ¿ Original ¿ x 100 ¿ ¿
Change∈sales
Sales growth= x 100
Original sales
Profit=Total revenue−Total costs
Profit using contribution=Total contribution−¿ costs
Total revenue=Selling price x number of units sold
Total costs=¿ costs+Variable costs
Contribution per unit=Selling price per unit−Variable costs per unit
Total contribution=Contribution per unit x Number of units sold
Total contribution=( Price−Variable costs ) x Quantity
¿ costs
Break even quantity=
Contribution per unit
Margin of safety=Current output −Break even output
Total variable costs=Variable cost per unit x Number of units sold
Costs of goods
Sales growth=Selling price−
Services bought
Gross profit =Sales−Cost of sales(variable costs)
Gross profit
Gross profit margin= x 100
Salesrevenue
Operating profit =Sales−Costs of sales−Operating expenses
Operating profit =Gross profit −Overhead expenses
Operating profit
Operating profit margin= x 100
Sales revenue
Net profit
Returnon investment = x 100
Capital invested
Return on investment
Returnon capital employed = x 100
Cost of investment
N umber of staff leaving
Labor turnover= x 100
Average staff
Total value of output
Labor productivity= x 100
Total number of employees
N umber of staff absent on 1 day
Labor absenteeism= x 100
Average staff
Current output
Capital unitilization= x 100
Maximum output
Total costs
Unit costs=
Output
Total labor costs
Labor cost per unit=
Unit of output
% change∈demand
PED=
% change∈ price
Number of issued shares
Market capitalization=
C urrent market price
Profit of the year =Operating profit −(Interest costs+Tax)
Number of employees at the end of period−Number of leavers
Employee retention rate= x 100
Number of employees at end
Operating profit
ROCE= x 100
Equity + Noncurrent liabilities
¿ costs
Break even quantity=
Contribution per unit
Current asset
Current ratio=
Current liabilities
Noncurrent liabilities
Gearing= x 100
Equity+ Non current liabilities
Payables
Payable days= x 365
Co st of sales
Receiv ables
Receivable days= x 365
S ales
Cost of goods sold
Inventory turnover=
Average inventory
(Costs of project∨investment )
Payback=
Annual cash inflows
Annual profit ( Net cash flow)
Average rate of return ( ARR)= x 100
Initial capital cost
Annual profit ( Net cash flow)
Average rate of return ( ARR)= x 100
Average capital cost
Net present value ( NPV )=Net cash flow x Discount factors−Original investment
Average capital cost=¿ ¿
Lower discount rate+ NPV at lower rate
Internal rate of return(IRR)= x ( Higher rate−Lower rate)
PV at lower rate−PV at higher rate
Current assets−Inventories
Acid test ratio=
C urrent liabilities
Output
Capital productivity=
Capital employed
