Flashcards
CIMA CERT BA 1 Equations
Cards in this deck (7)
- 1(Short-term Measures) Return on Capital Employed (ROCE) Also: Return on Net Assets (RONA)ROCE=
profit before interest & tax
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average capital employed
(gives an indication as to how well a biz uses its capital to generate profits)
RONA=
operating profit (before interest & tax)
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total assets - current liabilites - 2(Short-term Measures) Earnings Per Share (EPS)Determines the profit available to ordinary shareholders, expressed per share. Only gives the earning per share might expect to receive.
EPS=
profits after interest, tax & preference share dividends
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# of ordinary shares issued - 3Price Elasticity of Demand (PED)Percentage change in quantity demanded
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Percentage change in price
Concept explains the relationship between changes in quantity demanded and changes in price.
Can be applied at on point or over part (arc) - 4PED Calculation: non-average arc method average arc methodmeasures:
% change in quantity demanded
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% change in price
(non-ave=using the starting point of price and quantity as the basis of % calculation
ave=using the average price and quantity as the basis for the % calculation) - 5Price Elasticity of Supply (PES)% change in quantity supplied
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% change in price
Is a measurement of the responsiveness of supply of a good to a change in its price.
Always has a positive value. - 6PES Calculation: non-average arc method average arc method% change in quantity supplied
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% change in price
(non-ave=using the starting point of price and quantity as the basis of % calculation
ave=using the average price and quantity as the basis for the % calculation) - 7Multiplier equationK = 1/ (1-MPC)
MPC is marginal propensity to consume or
K = 1/MPS
MPS is the marginal propensity to save