Business Studies WJEC Component 2 Formulas Questions and Answers 2023

Business Studies WJEC Component 2 Formulas Questions and Answers 2023 Price Elasticity of Demand % change in demand ------------------------ % change in price Income Elasticity of Demand % change in demand ------------------------ % change in income Time Series Analysis Add up three consecutive years ----------------------------------- 3 Gross Profit Margin Gross profit ------------- x 100 revenue Net Profit Margin Net profit ----------- x 100 revenue Return on Capital Employed Net Profit ------------------- x 100 Capital Employed Gearing Ratio Long term liabilities ---------------------- x 100 capital employed Current ratio ( ...:... ) Current assets ------------------ current liabilities Acid Test Ratio ( ...:... ) current assets - stock ------------------------ current liabilities Working Capital Current assets - Current liabilities Capital Employed Shareholders funds + long term liablities + profit and loss reserves Depreciation Cost - residual value ----------------------- useful life of asset Cost of Sales Opening stock + Purchases - Closing stock Gross Profit Sales - Cost of Sales Net Profit Gross profit - Expenses Total Expenses All expenses added up Retained profit Net profit - tax - dividends Total Float Latest Finish Time - Earliest Start Time - Duration Free Float EST at end - EST at start - Duration Payback Period Number of years until last negative cash flow + Amount still required / ------------------------------------------------- x 12 Net cash flow in year cash becomes positive Average Rate of Return (Total Net Profit / No of years ) ---------------------------------- x 100 Initial Cost Net Present Value 1. Multiply cash inflow by discount factor 2. Add up present values 3. Take away initial cost of investment 4. Positive answer suggests investment is worthwhile