A level calculation sheet

Question 1

gross profit

Answer 1

revnue - cost of sales

Question 2

operating profit

Answer 2

gross profit - operating expenses

Question 3

net profit

Answer 3

operating profit - interest - tax

Question 4

gross profit margin

Answer 4

gross profit / revenue x 100

Question 5

operating profit margin

Answer 5

operating profit / revenue x 100

Question 6

net profit margin

Answer 6

net profit / revenue x 100

Question 7

how to calculate expected value in decision trees

Answer 7

outcome value x probability

• succes - profit is £100k with 0.7 probability
• failure - loss £20k with 0.3 probability
• EV = (100k x 0.7) + (-20k x 0.3)

Question 8

how to calculate net gain in decision trees

Answer 8

expected value - cost of decision

Question 9

how to calculate break even

Answer 9

fixed costs / contribution per unit

Question 10

how to calculate contribution

Answer 10

selling price per unit - varibale cost per unit

Question 11

how to calculate margin of safety

Answer 11

actual output - break even output

Question 12

capcity utilisation

Answer 12

actual output / maximum possible output

Question 13

variance

Answer 13

actual - budgeted

Question 14

labour productivity

Answer 14

total output / number of employees

or output / number of hours worked

Question 15

labour turnover

Answer 15

number of staff leaving / average number of staff x 100

Question 16

labour retention rate

Answer 16

staff not leaving in the past year / average number of staff employed in year x 100

Question 17

payback period

Answer 17

1. calculate the net cash flow for each year and add it to the cumulative cash flow (CCF)
2. idnetify the year that had the last negative CCF
3. use the calculation of (amount still to pay back / net cash flow for the next year x 12)

Question 18

average rate of return (ARR)

Answer 18

1. add up projects total profit (take away any costs)
2. divide profject profit by the number of years you have
3. divide answer by initial size of investment
4. x 100 to get a percentage

average yearly profit / cost of investment x 100

Question 19

net present value (NPV)

Answer 19

1. found out the cash flow for that year
2. multiply thay years net cash flow by the discount rate
3. add up all the present values to get the NPV
4. minus any costs

Question 20

net assets

Answer 20

total assets - total liabilities

Question 21

market capitalisation

Answer 21

share price x number issued

Question 22

market growth

Answer 22

new market size - originial market size / original market size x 100

Question 23

sales growth

Answer 23

new sales - original sales / original sales x 100

Question 24

market share

Answer 24

business sales / total sales x 100

Question 25

PED

Answer 25

% change in price / % change in quantity demanded

Question 26

added value

Answer 26

selling price - cost of components (materials)

Question 27

unit cost

Answer 27

total cost / total output

Question 28

return on investment (ROI)

Answer 28

return from investment / cost of investment x 100

Question 29

return on capital employed (ROCE)

Answer 29

operating profit / capital employed x 100

Question 30

current ratios and what does it show

Answer 30

current asset / current liabilities ## Footnote short term liquidity, shows for every pound of debt how much do you have to pay it off

Question 31

acid test and what does it show

Answer 31

current asset - inventory / current liabilities ## Footnote the businesses ability to pay its short term debts using only its most liquid assets

Question 32

gearing and what does it mean

Answer 32

non-current liabilities / capital employed x 100 ## Footnote how much of a businesses finance comes from long term debt

Question 33

2 ways to calculate capital employed

Answer 33

* non-current liabilities + equity * non-current assets + (CA-CL)

Question 34

payable days

Answer 34

payables / cost of sales x 365

Question 35

recievables day

Answer 35

recievables / revenue x 365

Question 36

inventory turnover

Answer 36

cost of sales / average inventory

Question 37

fixed costs

Answer 37

* total contribution - profit * total costs - variable costs

Question 38

variable costs

Answer 38

revenue - total contribution