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all the formulas needed for paper 2 in the 2022 advanced information
Business Paper 2 Formulas
profit budget |
income budget - expenditure budget |
break-even |
fixed cost/contribution per unit |
contribution per unit |
selling price - variable cost per unit |
margin of safety |
planned output - break-even output |
profit |
(contribution per unit x quantity produced) - fixed costs |
gross profit |
revenue - cost of sales |
operating profit |
gross profit - operating costs |
net profit |
operating profit + profit from other activities - net finance costs - tax |
gross profit margin |
(gross profit/revenue) x100 |
operating profit margin |
(operating profit/revenue) x100 |
net profit margin |
(net profit/revenue) x100 |
current ratio |
current assets/current liabilities |
acid test ratio |
(current assets – inventory)/current liabilities |
capacity utilisation |
(actual output/maximum possible output) x100 |
gearing ratio |
(non-current liabilities/capital employed) x100 |
return on capital employed |
(operating profit/capital employed) x100 |
capital employed |
total equity + non-current liabilities |
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