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Ib Business Formulas

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3K views

Ib Business Formulas

Uploaded by

kdo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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IB BUSINESS FORMULAS

Sales of 1 product
𝑀𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 = x 100
Total market share

Change in size
𝑀𝑎𝑟𝑘𝑒𝑡 𝑔𝑟𝑜𝑤𝑡ℎ = x 100
Original size

Change in sales
𝑆𝑎𝑙𝑒𝑠 𝑔𝑟𝑜𝑤𝑡ℎ = x 100
Original sales

𝑃𝑟𝑜𝑓𝑖𝑡 = Total revenue − Total costs

𝑃𝑟𝑜𝑓𝑖𝑡 𝑢𝑠𝑖𝑛𝑔 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 = Total contribution − Fixed costs

𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = Selling price x number of units sold

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 = Fixed costs + Variable costs

𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 = Selling price per unit − Variable costs per unit

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 = Contribution per unit x Number of units sold

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 = (Price − Variable costs) x Quantity

Fixed costs
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 =
Contribution per unit

𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑠𝑎𝑓𝑒𝑡𝑦 = Current output − Break even output

𝑇𝑜𝑡𝑎𝑙 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡𝑠 = Variable cost per unit x Number of units sold

Costs of goods
𝑆𝑎𝑙𝑒𝑠 𝑔𝑟𝑜𝑤𝑡ℎ = Selling price −
Services bought

𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 = Sales − Cost of sales (variable costs)

Gross profit
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 = x 100
Sales revenue

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 = Sales − Costs of sales − Operating expenses

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 = Gross profit − Overhead expenses

Operating profit
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛 = x 100
Sales revenue

Net profit
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = x 100
Capital invested

Return on investment
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 = x 100
Cost of investment

Number of staff leaving


𝐿𝑎𝑏𝑜𝑟 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = x 100
Average staff

Total value of output


𝐿𝑎𝑏𝑜𝑟 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = x 100
Total number of employees

Number of staff absent on 1 day


𝐿𝑎𝑏𝑜𝑟 𝑎𝑏𝑠𝑒𝑛𝑡𝑒𝑒𝑖𝑠𝑚 = x 100
Average staff
Current output
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑢𝑛𝑖𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 = x 100
Maximum output

Total costs
𝑈𝑛𝑖𝑡 𝑐𝑜𝑠𝑡𝑠 =
Output

Total labor costs


𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 =
Unit of output

% change in demand
𝑃𝐸𝐷 =
% change in price

Number of issued shares


𝑀𝑎𝑟𝑘𝑒𝑡 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
Current market price

𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟 = Operating profit − (Interest costs + Tax)

Number of employees at the end of period − Number of leavers


𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒 𝑟𝑒𝑡𝑒𝑛𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = x 100
Number of employees at end

Operating profit
𝑅𝑂𝐶𝐸 = x 100
Equity + Non current liabilities

Fixed costs
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 =
Contribution per unit

Current asset
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =
Current liabilities

Non current liabilities


𝐺𝑒𝑎𝑟𝑖𝑛𝑔 = x 100
Equity + Non current liabilities

Payables
𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝑑𝑎𝑦𝑠 = x 365
Cost of sales

Receivables
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑑𝑎𝑦𝑠 = x 365
Sales

Cost of goods sold


𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
Average inventory

(Costs of project or investment)


𝑃𝑎𝑦𝑏𝑎𝑐𝑘 =
Annual cash inflows

Annual profit (Net cash flow)


𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 (𝐴𝑅𝑅) = x 100
Initial capital cost

Annual profit (Net cash flow)


𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 (𝐴𝑅𝑅) = x 100
Average capital cost

𝑁𝑒𝑡 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 (𝑁𝑃𝑉) = Net cash flow x Discount factors − Original investment

(Initial capital cost − Residual capital value


𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 =
2

Lower discount rate + NPV at lower rate


𝐼𝑛𝑡𝑒𝑟𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑟𝑒𝑡𝑢𝑟𝑛 (𝐼𝑅𝑅) = x (Higher rate − Lower rate)
PV at lower rate − PV at higher rate

Current assets − Inventories


𝐴𝑐𝑖𝑑 𝑡𝑒𝑠𝑡 𝑟𝑎𝑡𝑖𝑜 =
Current liabilities

Output
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
Capital employed

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