A2 formulae Flashcards

Average cost per unit = $$\frac{total\ production\ costs}{total\ output}$$

Growth = $$\frac{output\ units\ for\ year\ B - output\ units\ for\ year\ A}{output\ units\ for\ year\ A}$$ x 100

Growth = $$\frac{revenue\ for\ year\ B - revenue\ for\ year\ A}{revenue\ for\ year\ A}$$ x 100

Payback is when the cumulative cash flow equals zero. If payback occurs part way through a year then use: Payback period = Number of years + $$\frac{outlay\ outstanding}{monthly\ cash\ flow\ in\ year\ of\ payback}$$

Average rate of return (%) = $$\frac{average\ annual\ profit}{initial\ outlay}$$ x 100

Net present value = $$\sum{(cash\ flow\ per\ year \times discount\ factor)}$$ . Note: Remember to subtract the initial outlay.

Capital employed

= total equity + non-current liabilities

(Note: total equity and long-term loans)

Gross profit = Revenue - cost of sales

Operating profit = gross profit - expenses

Gearing ratio

= $$\frac{long\ term\ liabilities}{capital\ employed}$$ x 100