Every formula you need for Units 1–4 of AP Business with Personal Finance, the units on the AP Exam, on one printable page. Each formula has a worked example, and the mix-ups that cost the most points are at the bottom.
AP Business Formula Sheet Units 1–4 · apbusinessexamprep.com
Unit 1: Value
Unit 2: Marketing
Unit 3A: Saving and borrowing
Unit 3B: Business finance
Unit 4: KPIs and decisions
Watch out
Jump to: Unit 1 · Unit 2 · Unit 3 · Unit 4 · Common mix-ups · Check yourself · FAQ
| What you’re finding | Formula | Example |
|---|---|---|
| Value capture (what the business keeps) | Price − cost to produce | A $70 jacket that costs $50 to make: $70 − $50 = $20 |
| Consumer surplus (what the customer keeps) | What the customer would pay − price paid | She’d pay up to $90 and pays $70: $90 − $70 = $20 |
| Total value created | What the customer would pay − cost to produce (= value capture + consumer surplus) | $90 − $50 = $40 ($20 + $20) |
Market price isn’t a formula: it’s the equilibrium price, where the quantity buyers want equals the quantity sellers offer.
| What you’re finding | Formula | Example |
|---|---|---|
| Revenue | Price × quantity sold | 300 units at $18: $5,400 |
| Customer acquisition cost (CAC) | Marketing, advertising, and sales spending ÷ new customers gained | $3,000 ÷ 150 new customers = $20 |
| Customer lifetime value (CLV), simple | Revenue per period × number of periods a customer stays | $25 a month × 6 months = $150 |
| Value of a new customer | CLV − CAC (CLV must be higher than CAC) | $150 − $20 = $130 |
| Per-unit cost | Total costs ÷ units produced | ($1,200 fixed + $6 × 300) ÷ 300 = $3,000 ÷ 300 = $10 |
| Per-unit profit margin | Price − per-unit cost | $18 − $10 = $8 |
| Cost-based price (markup) | Cost + (markup % × cost) | $10 + (50% × $10) = $15 |
| Markup percentage | (Price − cost) ÷ cost × 100 | ($15 − $10) ÷ $10 = 50% |
| What you’re finding | Formula | Example |
|---|---|---|
| Monthly savings for a goal | Amount still needed ÷ months available | ($1,800 goal − $600 saved) ÷ 10 months = $120 a month |
| Total repaid on a loan | Monthly payment × number of payments | $250 × 48 payments = $12,000 |
| Total interest paid | Total repaid − amount borrowed | $12,000 − $10,500 = $1,500 |
| Credit utilization | Card balances ÷ credit limits × 100 | $600 ÷ $2,000 = 30% |
| What you’re finding | Formula | Example |
|---|---|---|
| Break-even point (units) | Fixed costs ÷ (price − variable cost per unit) | $12,000 ÷ ($20 − $8) = 1,000 units |
| Rate of return | (Income received + capital gain) ÷ price paid × 100 | Stock bought for $100, paid an $8 dividend, sold for $120: ($8 + $20) ÷ $100 = 28% |
| Revenue projection | Projected units × price | 2,000 × $15 = $30,000 |
| Gross profit | Revenue − cost of goods sold (COGS, or cost of sales) | $50,000 − $20,000 = $30,000 |
| Operating profit | Gross profit − operating expenses | $30,000 − $18,000 = $12,000 |
| Pre-tax income | Operating profit − interest expense | $12,000 − $2,000 = $10,000 |
| Net profit (net income) | Pre-tax income − taxes | $10,000 − $2,500 = $7,500 |
| Gross, operating, or net profit margin | That profit ÷ revenue × 100 | Net: $7,500 ÷ $50,000 = 15% (gross 60%, operating 24%) |
| Per-unit gross profit | Price − cost per unit (COGS per unit) | $50 − $10 = $40 |
| Percent change | (New − old) ÷ old × 100 | Revenue from $80,000 to $92,000: $12,000 ÷ $80,000 = +15% |
| Balance sheet equation | Assets = liabilities + owners’ equity | $90,000 = $35,000 + $55,000 |
| Owners’ equity, or personal net worth | Assets − liabilities | $90,000 − $35,000 = $55,000 |
| Working capital | Current assets − current liabilities | $40,000 − $25,000 = $15,000 |
| Ending cash | Beginning cash + cash inflows − cash outflows | $8,000 + $30,000 − $33,000 = $5,000 |
| Net change in cash | Operating + investing + financing cash flows | $14,000 − $20,000 + $10,000 = +$4,000 |
The income statement runs in this order: revenue − COGS = gross profit − operating expenses = operating profit − interest = pre-tax income − taxes = net profit.
| What you’re finding | Formula | Example |
|---|---|---|
| Rate or percentage KPI (order accuracy, on-time rate, retention) | Part ÷ whole × 100 | 588 of 600 deliveries on time = 98% |
| Growth, or customer acquisition rate | Percent change: (new − old) ÷ old × 100 | New customers from 400 to 500: 100 ÷ 400 = 25% |
| Market share | Business’s sales ÷ total market sales × 100 | $300,000 ÷ $2,000,000 = 15% |
| Average transaction size | Sales ÷ number of transactions | $45,000 ÷ 1,500 = $30 |
| Per-unit cost | Total production cost ÷ units produced | $84,000 ÷ 3,500 = $24 |
| Gap from a benchmark | KPI − benchmark (in percentage points for rates) | 92% vs. a 95% benchmark = 3 points below |
| Monthly added profit | Added monthly revenue − added monthly costs | $15,000 − $11,000 = $4,000 |
| Payback period | One-time investment ÷ monthly added profit | $60,000 ÷ $4,000 = 15 months |
| Return on investment (ROI) | Added profit ÷ cost of the investment × 100 | $2,000 a year ÷ $8,000 = 25% a year |
If a question defines a KPI or gives a formula (payback period and ROI especially), use the question’s version.
1. A smoothie stand has $3,600 in monthly fixed costs. Each smoothie sells for $7 and costs $3 in ingredients and cups. How many smoothies must it sell each month to break even?
2. A business had revenue of $200,000, COGS of $120,000, and operating expenses of $50,000. Find its gross and operating profit margins.
3. An app spent $9,000 on ads and gained 300 subscribers who pay $8 a month and stay about 10 months. Find CAC and CLV. Is the ad spending paying off?
4. Maya borrows $6,000 and repays it with 36 monthly payments of $190. How much interest does she pay?
5. A store’s on-time delivery rate went from 90% to 93%, and its benchmark is 95%. By how much did it improve, and how far is it from the benchmark?
College Board’s exam page for AP Business with Personal Finance doesn’t list a formula sheet, so plan to know these formulas yourself. If a question defines a KPI or gives a formula, use the question’s version.
Only a 4-function calculator. The exam is fully digital in the Bluebook app, which has a built-in Desmos 4-function calculator. Scientific and graphing calculators aren’t allowed.
No. You won’t calculate compound interest on the AP Exam; it’s used in the Unit 5 Financial Advisor Project, and Unit 5 isn’t on the exam. Rate of return is on the exam.
