Studyowl Quick Business Revision

Studyowl Quick Business Revision

Quick Business Revision

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Break-Even Analysis

FinancePosted by Trusty Owl Fri, April 07, 2017 10:19:25

Break-Even analysis is a tool used by businesses to forecast the profit/loss a business could make depending on the quantity of goods or services sold.

Read through the presentation above to understand the principles of break-even analysis and the variables that can affect the position of the BREAK-EVEN POINT.

When studying Break-Even Analysis you need to understand the limitations of it as a decision making tool. Break-Even Analysis is quite a simplistic tool that does not take into account external factors such as the sale of competitor's products. It assumes that all products/services produced will be sold. Break-Even Analysis requires the use of charts which need to be manipulated according the changes in price that will be charged.