Break-Even Analysis

  • Created by: Amber2398
  • Created on: 28-03-15 08:20

Break-Even Analysis Modal Evaluation

AO1: It is important to know the BEQ so that a firm know how many products will have to be made and sold inorder to make a profit

AO3: TMT a decision can be made on whether the business is viable and if it should continue or perhaps the selling price could be changed bringing in a greater revenue per unit.

AO4:H as the year goes by some costs and revenues may change or may not be as expected rendering the originally calculated BEQ meaningless.

AO1: The BE graphs are theoretical and unrealistic. in real world the lines unlikely to straight.

AO3: TMT BEQ only guideline nd when making decisions external factors need to considered.

AO4: H by knowing the BEQ banks or investors are more likely to lend money as it provides some safeguard for the return of their money

AO1: Kowing the BEQ is an excellent quantitative tool for decision making but non-financial (qualitative) factors must not be ignored.

AO3: TMT important aspects of the business or product may not be considered could cause changes in the BEQ and it may not be viable in aiding decision making.

AO4:H if there is confidence that a certain output level for a certain profit can be reached then the margin of safety should insure a profit.

FJ: BEA is a guideline which can aid initial decision making but there are too many external factors which could change it to only be considering this when making decisions.

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