47 terms

# Business Studies AS & A Levels: Formulas

Just noted down the formulas given in the whole AS Level book. :)

#### Terms in this set (...)

Market Capitalization.
= current share price x tot. no. of shares issued
Market share.
% of sales in the total market sold by a business.

= (tot. sales of bus. / tot. sales of industry) x 100

OR

= (firm's sales in time period / tot. market sales in time period) x 100
Equilibrium price.
demand = supply
Mean.
Sum of all results / no. of results

Ex: table - 2,3,5,7,2,6

Sum = 25
No. of results = 6

25 / 6 = 4.16
Mode.
The value that occurs the most frequently

ex: 2,3,6,2,5,7,9,2,3,1

In this case...the repetitive value is 2.
Median.
1stly, always put the values in ascending (AO)/descending (DO) order!

Ex: Odd No. of values given (put in AO)
= (No. of values + 1) / 2
2,5,6,1,5,7,8,2,7,9,10,4,3,4,3 (15 values)
--> 1,2,2,3,3,4,4,5,5,6,7,7,8,9,10 = (15+1) / 2 = 8
The median value is 8th value. = 5

Ex: Even No. of values (Put in AO)
= No. of values / 2
3,6,7,5,10,3,8,4,1,6,1,9,4,2 (14 Values)
--> 1,1,2,3,3,4,4,5,6,6,7,8,9,10 = 14 / 2 = 7
the median value is the 7th value = 4
Price elasticity of demand (PED).
= % change in quantity demanded / % change in price.

Ex:
% Change in demand = 10
% Change in price = 25

PED = 10 / 25 = 0.4q
(A LvL) Labor productivity.
Output per worker in a given time period.

= Tot. output in time period (ex, 1 year) / Tot. staff employed.
(A LvL) Absenteeism.
% of workforce absence as a portion of the employee total.

= (No. of staff absent / Tot. no. of staff) x 100
(A LvL) Labor turnover.
% of employees leaving the organization/business in a given time period.

= (No. of staff leaving in 1 year) / Average No. of staff employed) * 100
(A LvL) Income elasticity of demand.
The responsiveness of demand for a product followed by a change in consumer incomes.

= % Change in demand for product / % Change in consumer incomes
(A LvL) Promotional elasticity of demand.
The responsiveness of demand for a product followed by a change on spent amount promoting it.

= % Change in demand for product / % Change in promotional spending
(A LvL) Cross elasticity of demand.
The responsiveness of demand for a product followed by a change in the price of another product.

= % Change in demand for product A / % Change in demand for product B
(A LvL) Capacity utilization.
The rate of maximum output capacity being achieved.

= (Current output lvl / max. output lvl) x 100
Contribution per unit.
= Selling price (SP) - variable cost per unit
Break-even lvl of output.
= Fixed costs / contribution per unit
(A LvL) Unit Cost.
= Tot. cost of production / No. of units produced
Sales revenue/sales turnover (SR/ST).
= Selling price x quantity sold
Gross profit (GP).
= Sales revenue (SR) - cost of sales (CoS)
Net profit (NP).
Pre-tax profits (Profit before tax).
= NP - Interest
Profit after tax.
= Pre-tax profits - Tax
Retained profits (RP).
= Profit after tax - Dividends.
Gross profit margin.
= (GP / SR) x 100
Net profit margin.
= (NP / SR) x 100
Current ratio.
= Current assets / Current liabilities
Liquid assests.
= Current assets - Inventories/Stocks
Acid-test ratio.
= Liquid assets / Current liabilities
(A LvL) Straight-line depreciation.
= (Original costs of assets - Expected residual value) / Expected useful life of asset (years)
(A LvL) Capital employed.
= [(Non-current assets + current assets) - Current OR Non-current liabilities] + Shareholder's equity
(A LvL) Return on capital employed (%).
= (NP or operation profit / Capital employed) x 100
(A LvL) Inventory (stock) turnover ratio.
= CoG sold / Value of inventories
(A LvL) Day's sales in receivables ratio.
= Accounts receivable x 365 / SR
(A LvL) Account's receivable turnover ratio.
(A LvL) Dividend per share.
= Tot. annual dividends / Tot. No. of issued shares
(A LvL) Dividend yield ratio (%).
= (Dividend per share x 100) / Current share price
(A LvL) Dividend cover ratio.
= Profit after tax and interest / annual dividends
(A LvL) Earnings per share.
= Profit after tax / Tot. No. of shares
(A LvL) Price/Earnings ratio.
= Current share price / Earnings per share
(A LvL) Gearing ratio.
= (Long-term loans / Capital employed) x 100

OR

= (Non-current liabilities x 100) / (Shareholder's equity + Non-current liabilities.
(A LvL) Interest cover.
= Operating profit (Before tax & interest) / Paid annual interest
(A LvL) Annual forecast net cash flow.
= Forecast cash inflow - Forecast cash outflow
(A LvL) Payback period.
= (Additional net cash inflow NEEDED / Annual cash flow in the 1st positive cash flow year) x 12 (for months) OR 365 (for days)
(A LvL) Average rate of return (ARR).
= (Annual profit (Net cash flow) / Initial capital cost) * 100

There are 4 stages to calculate this...REMEMBER!

1. Add up all POSITIVE cash flows
2. Subtract INITIAL cost of investment
3. Divide it by lifespan
4. Multiply by 100 for %
(A LvL) Discounted cash flow (DCF).
I'm still having difficulty understanding or GETTING this formula, it would be very helpful if anyone would put up a simple formula for this in discussions! :(
(A LvL) Net present value (NPV).
= [(Net cash flow x Discount factors) + Discounted cash flows] - Capital costs
(A LvL) Initial rate of return (IRR)