Equations

Question 1

What is the formula for Percentage Change?

Answer 1

Difference or change / Original x100

This formula is used to calculate the percentage increase or decrease in a value.

Question 2

How is Revenue calculated?

Answer 2

Revenue = sales x price

Revenue represents the total income generated from sales before any costs are deducted.

Question 3

What is the formula for Total Costs?

Answer 3

Total costs = variable costs + fixed costs

This includes all costs associated with production.

Question 4

Define Average Unit Costs.

Answer 4

Average unit cost = total cost / output

This measures the cost per unit produced.

Question 5

What is the formula for Profit?

Answer 5

Profit = revenue - costs

Profit indicates the financial gain after all expenses are subtracted from revenue.

Question 6

How is Market Share calculated?

Answer 6

Market Share = ( Sales value or volume of your business / Sales value or volume of the whole market) x100

This indicates the portion of a market controlled by a company.

Question 7

What does Market Growth measure?

Answer 7

Market Growth = (Change in sales value or volume / Original sales value or volume ) x100

This indicates the increase in market size over a specific period.

Question 8

What is the formula for Average Rate of Return (ARR)?

Answer 8

ARR (%) = ( Average Annual Profit / Initial Investment ) x100

This measures the profitability of an investment relative to its cost.

Question 9

What is the formula for Break Even?

Answer 9

Break Even = Total Costs - Total Revenue

This indicates the point at which total revenues equal total costs.

Question 10

How is Net Cash Flow calculated?

Answer 10

Net Cash Flow = Total cash inflows - total cash outflows

This measures the net amount of cash being transferred in and out of a business.

Question 11

What is the formula for Closing Balance?

Answer 11

Closing Balance = Opening Balance + net cash flow

This reflects the total cash available at the end of a period.

Question 12

Define Gross Profit.

Answer 12

Gross Profit = Revenue - Costs of Sales

This indicates the profit a company makes after deducting the costs associated with making and selling its products.

Question 13

What is the formula for Operating Profit?

Answer 13

Operating Profit = Gross Profit - Overheads or expenses

This measures the profit from core business operations, excluding costs not directly tied to production.

Question 14

How is Net Profit calculated?

Answer 14

Net Profit = Operating Profit - tax - finance costs

This represents the actual profit after all expenses, taxes, and costs have been deducted.

Question 15

What is the formula for Gross Profit Margin?

Answer 15

Gross Profit Margin = (Gross Profit )/ Sales revenue x100

This indicates the percentage of revenue that exceeds the cost of goods sold.

Question 16

How is Net Profit Margin calculated?

Answer 16

Net Profit Margin = (Net profit) / Sales revenue x100

This measures how much of each dollar earned translates into profits.

Question 17

What is the formula for Net Current Assets?

Answer 17

Net Current Assets = Current assets - current liabilities

This indicates the liquidity position of a company.

Question 18

Define Net Assets.

Answer 18

Net Assets = Non-current assets + net current assets - non-current liabilities

This represents the total assets owned by a company after all liabilities are deducted.

Question 19

What is the formula for Total Equity?

Answer 19

Total Equity = Share capital + Retained Profits

This represents the ownership interest in a company.