Aids To Trade That Support Commerce: Sources Of Finance And Commercial Performance: Commercial Calculations (Copy)
Cheat Sheet: 5.4.2 Commercial Calculations
Key Formulas
| Term | Formula | Explanation | Example |
|---|---|---|---|
| Revenue (Sales/Turnover) | Selling Price per Unit × Number of Units Sold | Total income from sales | $10 × 500 = $5,000 |
| Gross Profit | Revenue – Cost of Sales | Profit before expenses | $5,000 – $3,000 = $2,000 |
| Gross Profit Margin (%) | (Gross Profit ÷ Revenue) × 100 | Profitability as % of revenue | (2,000 ÷ 5,000) × 100 = 40% |
| Net Profit (Profit for the Year) | Gross Profit – Expenses | Final profit after expenses | $2,000 – $1,200 = $800 |
| Working Capital | Current Assets – Current Liabilities | Liquidity measure | $5,000 – $3,000 = $2,000 |
| Mark-up (%) | (Selling Price – Unit Cost) ÷ Unit Cost × 100 | Profit as % of cost | ($10 – $6) ÷ $6 × 100 = 67% |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
Key Insights
| Concept | Meaning | Use |
|---|---|---|
| Revenue | Measures sales income | Growth indicator |
| Gross Profit | Shows efficiency in buying/selling | Pricing strategy |
| Net Profit | True profitability after costs | Investor confidence |
| Working Capital | Short-term financial health | Ability to pay bills |
| Mark-up % | Pricing decision tool | Retail mark-ups |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
Example Walkthrough
| Step | Example Data |
|---|---|
| Selling Price = $20, Units Sold = 200 → Revenue = $4,000 | |
| Cost of Sales = $2,500 → Gross Profit = $1,500 | |
| Gross Profit Margin = (1,500 ÷ 4,000) × 100 = 37.5% | |
| Expenses = $900 → Net Profit = $600 | |
| Current Assets = $3,500, Current Liabilities = $2,000 → Working Capital = $1,500 | |
| Mark-up % = (20 – 12.5) ÷ 12.5 × 100 = 60% |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
Summary
| Takeaway |
|---|
| Commercial calculations measure profitability, liquidity, and pricing. |
| They help businesses plan sales, control costs, and manage resources effectively. |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course