Appendix 3: Formulae for Business GCSE Edexcel
This page provides a comprehensive list of essential Business formulas GCSE Edexcel that students need to know for their exams. These formulas are not provided during the examinations for Paper 1 or Paper 2, making it crucial for students to memorize and understand them thoroughly.
Total Costs
The formula for total costs is presented as:
TC (total cost) = TFC (total fixed costs) + TVC (total variable costs)
Definition: Total cost is the sum of all fixed and variable costs incurred by a business.
Revenue
The revenue formula is given as:
Revenue = price x quantity
Highlight: This simple yet fundamental formula is crucial for calculating a business's income from sales.
Break Even
Two formulas are provided for break-even analysis:
- Break even point in units = fixed cost / (sales price - variable cost)
- Break even point in costs / revenue = break even point in units x sales price
Example: If a company has fixed costs of £10,000, a sales price of £50, and variable costs of £30 per unit, the break-even point would be 500 units (10,000 / (50 - 30)).
Margin of Safety
The margin of safety is calculated as:
Margin of safety = actual or budgeted sales - break even sales
Vocabulary: Margin of safety represents the amount by which actual sales exceed the break-even point.
Interest on Loans
The interest formula is presented as:
Interest (on loans) in % = (total repayment - borrowed amount) / borrowed amount x 100
Net Cash-Flow and Balances
Formulas for net cash-flow and balances include:
- Net cash-flow = cash inflows - cash outflows in a given period
- Opening balance = closing balance of the previous period
- Closing balance = opening balance + net cash-flow
Profit Calculations
Several profit-related formulas are provided:
- Gross profit = sales revenue - cost of sales
- Gross profit margin (%) = (gross profit / sales revenue) x 100
- Net profit = gross profit - other operating expenses and interest
- Net profit margin (%) = (net profit / sales revenue) x 100
Quote: "Net profit margin (%) = (net profit / sales revenue) x 100"
Average Rate of Return
The formula for average rate of return is:
Average rate of return (%) = (average annual profit / cost of investment) x 100
Highlight: This formula is particularly important for Business formulas A level students, as it's used to evaluate the profitability of investments.
These formulas are essential for success in Business formulas GCSE AQA and Edexcel Business formula sheet a level exams. Students should practice using these formulas in various business scenarios to fully grasp their applications and implications.
