Thursday, 26 February 2009

summary of business equation

BREAK EVEN=fixed cost over unit contributtion
TOTAL REVENUE=quantity times sell price
MARGIN SAFETY=volume minus break-evn
UNIT CONTRIBUTION=sell price minus variable price
NET PROFIT MARGIN(%)=net profit before tax over sales times 100%
RETURN ON CAPITAL(%)=net profit before tax over capital invested times 100%

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