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:

1. Break even point in units = fixed cost / $sales price - variable cost$
2. 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.