What Formula Is Used to Calculate the Number of Units

question 20

Multiple Choice

What formula is used to calculate the number of units needed to earn a desired profit?

• A)(fixed costs + variable costs)/sales
• B)(fixed costs + desired profit)/sales
• C)(fixed costs + desired profit)/contribution margin per unit
• D)(fixed costs + variable costs)/contribution margin per unit

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Definitions:

EPS

Earnings Per Share, a key financial metric indicating the profitability of a company, calculated as the company's profit divided by the outstanding shares of its common stock.

P/E Multiple

Price-to-Earnings ratio, a valuation metric for stocks that compares a company's market price per share to its earnings per share.

EPS

Earnings Per Share, a key financial indicator used to measure the profitability of a company, calculated as the net income divided by the number of outstanding shares.

Intrinsic Value

The inherent worth of an asset, distinct from its market value, based on its fundamental characteristics.