ee Formulae ‘The following formulae will be used in business management external assessment. A copy of the formulae will be provided to students for the examination. Formulae for ratio analysis (SL/HL) Profitability ratios (SL/HL) gross profit sales revenue Gross profit margin 100 profit before interest and tax, 499 sales revenue ) _ Profit before interest and tax , 49 capital employed Profit margin = Return on capital employed (ROCE} where capital employed = non-current liabilities + equity Liquidity ratios (SL/HL) current assets Current ratio= ‘current abilities current assets ~ stock Acid test (quick) ratio = ert abilities Efficiency ratios (HL only) cost of sales Stock turnover (number of times) = ©°S'°' SEES_ average stock or average stock cost of sales. Stock turnover (number of days) 365 opening stock + closing stock where average stock 3 debtors «365 total sales revenue Debtor days ratio (number of days) = creditors Creditor days ratio (number of days) = SPOT x non-current liabilities | capital employed Gearing ratio = 100 where capital employed = non-current liabilities + equity o Business management guide voFormulae Other formulae (SL/HL) Investment appr: SL/HL years of use, ) ~Lttal returns ~ capital cost 100 Average rate of return (ARR) 3 4 ‘capital cost HL only Net present value (NPV) = present values of retum — original cost zation and productivity (HL only) manic lta ouput, sys ‘ep — sat Soren a MS Rial a~ eight y100= Mathes wits acd to ions Se urns (eet = Slavia akc oma degra = UPR pal da Stadt distin Capacity ut Capacity utilization rate = Productivity rate = WD Business management guide 6s