Revenue
Also called sales revenue or turnover. Not the same as profit.
Revenue = selling price per unit × quantity sold Cambridge O Level 7115
📈 O Level Business Studies Reference Sheet 2026
Every formula, ratio and evaluation framework for Cambridge O Level Business Studies (7115) — with the case study technique that earns application and evaluation marks.
Break-Even Ratios Cash Flow Evaluation
Our reference sheets are free to download — save this one as PDF for offline revision.
Aligned with the latest 2026 syllabus and board specifications. This sheet is prepared to match your exam board’s official specifications for the 2026 exam series.
O Level Business Studies — Four Skills, Not One
Cambridge O Level Business Studies (7115) marks four separate things: knowledge, application, analysis and evaluation. Knowledge alone caps you in the lowest band. The calculations below are the easy marks; the application and evaluation frameworks are what lift an answer. Learn both.
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Every calculation on the syllabus, with units
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Profitability and liquidity ratios, with what each means
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Case study technique — how to use the business in the question
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Evaluation frameworks that reach the top band
Costs, Revenue and Profit
The foundation. Almost every calculation question builds on these.
Total Costs
Total costs = fixed costs + variable costs Variable costs = variable cost per unit × quantity
Fixed costs do not change with output (rent, salaries, insurance)
Variable costs change directly with output (raw materials, piece-rate wages)
Profit
A negative result is a loss. Always state which.
Profit = total revenue − total costs Gross Profit
Cost of sales is the direct cost of the goods sold, not all costs.
Gross profit = revenue − cost of sales Net Profit
Expenses are the indirect running costs: rent, salaries, marketing, utilities.
Net profit = gross profit − expenses (overheads) Average (Unit) Cost
Falling average cost as output rises is economies of scale.
Average cost = total costs ÷ output Added Value
Not the same as profit — it does not deduct labour or overheads.
Added value = selling price − cost of bought-in materials Break-Even Analysis
A guaranteed topic. Learn the formulas and the diagram labels together.
Contribution per Unit
This is the amount each sale contributes towards fixed costs.
Contribution per unit = selling price per unit − variable cost per unit Total Contribution
Total contribution = contribution per unit × units sold Break-Even Output
Answer in units. Always round UP to a whole unit — a part-unit does not break even.
Break-even output = fixed costs ÷ contribution per unit Break-Even Revenue
Break-even revenue = break-even output × selling price Margin of Safety
In units. It shows how far sales can fall before a loss starts.
Margin of safety = current output − break-even output Target Profit Output
Output for target profit = (fixed costs + target profit) ÷ contribution per unit Profit from Contribution
A faster route than the full revenue-minus-costs calculation.
Profit = total contribution − fixed costs Break-Even Chart Labels
Unlabelled axes lose marks even when the lines are correct.
x-axis: output / quantity. y-axis: costs and revenue in currency
Fixed cost line: horizontal
Total cost line: starts at fixed costs, slopes up
Revenue line: starts at the origin
Break-even point: where revenue crosses total cost
Limitations of Break-Even
Worth two evaluation marks whenever you are asked to assess it.
Assumes everything produced is sold
Assumes selling price and unit variable cost stay constant
Ignores the effect of bulk discounts and economies of scale
Based on forecasts, which may be wrong
Ratios — Profitability and Liquidity
Never calculate a ratio and stop. Say what the figure means for this business.
Gross Profit Margin
%. A rising margin means better control of direct costs or a higher selling price.
Gross profit margin = (gross profit ÷ revenue) × 100 Net Profit Margin
%. If gross margin holds but net margin falls, overheads have risen.
Net profit margin = (net profit ÷ revenue) × 100 Return on Capital Employed (ROCE)
%. Measures how efficiently invested capital generates profit. Compare against the return available elsewhere.
ROCE = (net profit ÷ capital employed) × 100 Current Ratio
Expressed as n:1. Around 1.5–2:1 is often considered comfortable; below 1:1 signals possible liquidity trouble.
Current ratio = current assets ÷ current liabilities Acid Test (Quick) Ratio
n:1. Stricter, because inventory may not sell quickly. Around 1:1 is the usual benchmark.
Acid test ratio = (current assets − inventory) ÷ current liabilities Interpreting a Ratio
The mark is in the interpretation, not the arithmetic.
State the figure with its unit (% or n:1)
Compare it — to last year, to a competitor, or to a benchmark
Say what it means for this business specifically
Note one limitation: one year's data, no industry context, historic figures
Cash Flow and Finance
Net Cash Flow
For the period. Negative net cash flow is not the same as making a loss.
Net cash flow = cash inflows − cash outflows Closing Balance
The closing balance of one month becomes the opening balance of the next — this is the most common slip in cash flow forecast questions.
Closing balance = opening balance + net cash flow Working Capital
The cash available for day-to-day operations.
Working capital = current assets − current liabilities Why Profitable Businesses Run Out of Cash
A standard evaluation point. Profit is recorded when a sale is made; cash arrives when the customer pays.
Customers given long credit periods
Too much cash tied up in unsold inventory
Large one-off purchases of fixed assets
Rapid expansion (overtrading)
Improving Cash Flow
For each method, be ready to give one drawback — that is where the evaluation mark sits.
Reduce credit given to customers; chase debtors
Negotiate longer credit from suppliers
Use overdraft or short-term loan finance
Lease rather than buy equipment
Sell off surplus assets; cut inventory levels
Sources of Finance — Matching to Need
Questions almost always ask you to choose. Justify the choice by the size, purpose and duration of the need, and by who owns the business.
Short-term need → overdraft, trade credit, debt factoring
Long-term need → bank loan, share issue, retained profit, leasing
Internal: retained profit, sale of assets, owner's savings
External: loans, shares, grants, venture capital
Case Study Technique — Application and Evaluation
Paper 2 is case-study based, and application marks are awarded only for using the business in front of you.
How to Earn Application Marks
Application means your answer could not be copied into an answer about a different business.
Test your own paragraph: swap the business name for 'the business'. If nothing is lost, you have not applied.
Use the business's name throughout
Quote figures from the case material
Refer to its specific sector, size, location and customers
Refer to its stated objectives and constraints
The Analysis Chain
Analysis is the causal link between a point and its consequence for this business.
Point → because → consequence for this business → effect on its objective
Two links in the chain is analysis; one is knowledge
Evaluation Framework
Evaluation is a supported judgement, not a summary of both sides.
'It depends on the situation' scores nothing. 'It depends on whether they can secure the loan at under 10%, given their existing debt' scores.
Recommend one option clearly
Give the strongest reason, grounded in the case data
Acknowledge the main drawback
State what the decision depends on — a condition, not a hedge
Stakeholder Framework
Useful for any 'effects of this decision' question. Pick the three most relevant, not all of them.
Owners and shareholders — profit, return, control
Employees — job security, pay, conditions
Customers — price, quality, availability
Suppliers — order volume, payment terms
Government — tax, employment, regulation
Local community — jobs, environment, congestion
Command Word Ceilings
On any justify or recommend question, the final paragraph must contain a decision. Without it the answer cannot reach the top band.
Identify / State — knowledge only, one or two marks
Explain — knowledge plus a developed reason
Analyse — a causal chain applied to the case
Justify / Recommend / Do you agree / Evaluate — a supported judgement is required
How to Use This Reference Sheet
Boost your Cambridge exam confidence with these proven study strategies from our tutoring experts.
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Write the unit on every answer
Units, %, n:1, or the currency used in the case. A correct number with no unit routinely loses the final mark.
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Round break-even output UP
Fixed costs ÷ contribution rarely divides exactly. 412.3 units means 413 — at 412 the business has not yet broken even.
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Name the business in every paragraph
This is the cheapest way to secure application marks on Paper 2, and it is the difference most often separating a grade B from a grade A.
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Always end with a decision
On justify, recommend and evaluate questions, your last two sentences should choose an option and say what the choice depends on.
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Never divide by the new value
Percentage change uses the original figure as the denominator. Checking this one habit fixes the most frequent arithmetic error on the paper.
Reference Sheet FAQ
Quick answers about this free PDF and how to use it for exam revision and active recall.
Is the Cambridge O Level Business Studies Reference Sheet 2026 free to download as a PDF?
Yes. This Tutopiya formula sheet is free to use and you can download it as a PDF from this page for offline revision. There is no payment or account required for the PDF download.
What Business Studies topics and equations does this formula sheet cover?
This page groups key Business Studies formulas in one place for revision. Reference sheet for Cambridge O Level Business Studies (7115). Every calculation — break-even, ratios, cash flow, market share — plus case study technique, command words and evaluation frameworks for Papers 1 and 2. Always cross-check with your official syllabus and past papers for your exam session.
Can I use this instead of the official exam formula booklet in the exam?
No. In the exam you must follow only what your exam board allows in the hall—usually the official formula booklet or data sheet where provided. This page is a revision and teaching aid, not a replacement for board-issued materials.
Who is this formula sheet for (Secondary)?
It is written for students preparing for assessments at Secondary in Business Studies, including classroom revision, homework support, and independent study. Teachers and tutors can also share it as a quick reference.
How should I revise with this formula sheet?
Work through past paper questions, quote the correct formula before substituting values, and check units and notation every time. Pair this sheet with timed practice and mark schemes so you see how examiners expect working to be set out.
Where can I get more help with Business Studies revision?
Explore Tutopiya’s study tools, past paper finder, and revision checklists linked from our tools hub, or book a trial lesson with a subject specialist for personalised support alongside this formula reference.
Need Help with O Level Business Studies?
Work through break-even, ratio interpretation and case study evaluation with a specialist Business Studies tutor.
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This reference sheet aligns with the Cambridge O Level Business Studies (7115) syllabus content and assessment objectives.
Paper structure and mark allocations are set by the syllabus for your session. Always check the current Cambridge 7115 syllabus before relying on a mark tariff.