What is the formula for Net cash flow?
Total Cash Inflow – Total Cash Outflow
Net cash flow indicates the overall cash position of a business.
How is the Closing balance calculated?
Opening balance + Net Cash Flow
This reflects the cash available at the end of a period.
What is the formula for Total revenue?
Selling Price x Quantity Sold
Total revenue represents the total income from sales.
Define Total costs.
Fixed costs + Total Variable costs
Total costs encompass all expenses incurred by a business.
What is the formula for Profit?
Total revenue – Total costs
Profit indicates the financial gain after all costs are deducted.
What does Total contribution represent?
Sales Revenue - Total Variable Costs
Total contribution measures the amount available to cover fixed costs and generate profit.
Calculate Contribution (per unit).
Selling Price – Variable Cost (per unit)
This indicates the contribution margin for each unit sold.
What is the formula for Profit (using contribution)?
Contribution per unit x margin of safety
This calculates profit based on the contribution margin and sales volume.
How is Break-even output determined?
Total Fixed Costs / Unit Contribution
This indicates the number of units that must be sold to cover all costs.
What does Margin of Safety measure?
Actual Sales – Break-even level of output
This indicates how much sales can drop before a business reaches its break-even point.
What is the formula for Revenue?
Unit price x Quantity sold
Revenue is the total income generated from sales before any expenses are deducted.
Define Gross profit.
Sales Revenue – Cost of Goods Sold
Gross profit indicates the profit made before deducting operating expenses.
What is the formula for Cost of goods sold?
Opening Inventory + Purchases – Closing Inventory
This calculates the total cost of inventory sold during a period.
How is Profit/loss for the year calculated?
Gross Profit – expenses + other income
This reflects the overall profitability of a business for the year.
What does Net book value represent?
Cost - Accumulated Depreciation
Net book value indicates the value of an asset after accounting for depreciation.
Define Net current assets.
Current Assets - Current Liabilities
This measures the liquidity position of a business.
What is the formula for Net assets?
Non-current assets + Net current assets - Long term liabilities
Net assets represent the total assets available to shareholders.
How is Capital employed calculated?
total assets – current liabilities
This indicates the total amount of capital used in a business.
What must balance in a Balance sheet?
Net Assets = Capital Employed
This reflects the fundamental accounting equation.
Calculate Gross profit margin.
Gross Profit / Revenue x 100
This indicates the percentage of revenue that exceeds the cost of goods sold.
What is Mark-up?
Gross Profit / Cost of Sales x 100
Mark-up represents the percentage added to the cost to determine the selling price.
Define Profit margin.
Profit / Revenue x 100
Profit margin indicates the percentage of revenue that constitutes profit.
How is Return on capital employed calculated?
Profit / Capital Employed x 100
This measures the efficiency of capital usage in generating profit.
What is the formula for Current ratio?
Current Assets / Current Liabilities
This ratio assesses a company’s ability to pay short-term obligations.
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Glossary100
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Formulas25
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1 - Methods Of Payment28
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2 - Types Of Current Accounts8
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3 - Types Of Borrowing12
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4 - Types Of Saving And Investment12
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5 - Types Of Insurance12
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6 - Types Of Financial Institutions18
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7 - Methods Of Communication With Customers10
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8 - Providers Of Financial Information And Guidance12
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9 - The Purpose Of Accounting33
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10 - Sources Of Business Finance (Internal)6
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11 - Sources Of Business Finance (External)26
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12 - Break-Even And Cash Flow Forecasts24
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13 - Statements Of Comprehensive Income And Financial Position20
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14 - Ratio Analysis10
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EXTRA8
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Fomula28
