Business Formulas

Theme 1 Formulas

Product elasticity of demand = % Change in quantity demanded

(PED) % Change in price

Total revanue = Price x Quantity

Income elasticity of Demand = % Change in quantity demanded

(YED) % Change in income

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Sales Volume = Sales Revanue

Unit Price

Sales Revanue = Selling Price x Sales Volume

Contribution = Selling Price - Variable costs per unit

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Total Contribution = Sales revanue - Total variable cost

Break Even Point = Fixed Costs

Contribution

Profit = (Total sales - Breakeven sales level) x Contribution

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Gross Profit = Turnover - Variable costs

Operating proft = Turnover - ( Fixed / Variable costs )

Profit for the year = Turnover - ( Fixed / variable ) - ( tax / interest )

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Profit Margin = Profit x 100 (Experessed as a %)

Turnover

Current Ratio = Current Assests

Current Liabilities

Acid Test Ratio = Current Assets - Stock

Current Liabilities

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Working Capital = Current Assets - Current Liabilities

Capacity utilisation = Current Output x100

Maxium possiable output

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