Profits & Costs Formulae
Total revenue – Total cost
Profit
Current assets – Current liabilities
Working capital
(net current assets)
Fixed costs / (Price – Average variable cost)
Break-even quantity
When customers temporarily take out more money than is available in their bank account
Overdrafts
Opening stock + Purchases – Closing stock
Cost of sales (COS)
Non-current assets + Working capital – Non-current liabilities
Net assets
Actual sales volume – Break-even sales volume
Margin of safety
The firm’s suppliers who have yet to be paid
Trade creditors
Total Assets = $650,000
Non-current Liabilities = 350,000
Net assets = $200,000
What are the current liabilities?
$100,000
(Gross profit / Sales revenue) × 100
Gross profit margin (GPM)
Total assets – Total liabilities
Equity (or Shareholders’ equity)
(Total Fixed Cost ÷ Output) + Average Variable Cost
Target price
The final category on a cash flow forecast
Closing balance
Tax = $20,000
Profit for Period = $100,000
Retained profit = $65,000
Dividends?
What is $35,000?
Total variable cost + Total fixed cost
Total cost
(Profit before interest and tax / Capital employed) × 100
Return on capital employed
Price × Quantity – [Fixed cost + (Average variable cost × Quantity)]
Target profit
Where the opening balance number comes from for a given time period
the closing balance of the last time period
Total Revenue = $100,000
Total Cost = $55,000
Total Fixed Cost = $15,000
Units 5,000
What is the average variable cost?
What is $8?
TVC = $40,000
$40,000/5,000 = $8
Profit after interest and tax – Dividends
Retained profit
(Current assets – Stock) / Current liabilities
Acid test (quick) ratio
Price – Average variable cost
Unit contribution
The chief accountant of 360 Computers has compiled the following financial data:
Opening balance = $50,000
Total cash outflows = $120,000, and
Total cash inflows = $110,000.
Calculate the closing balance for 360 Computers.
$40,000
Net cash flow = $110,000 minus $120,000 = ($10,000)
Closing balance = $50,000 + ($10,000) = $40,000
These two things add up to equity