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Give an explanation of break-even analysis and explain how it supports the achievement of strategic aims and objectives.
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| Submitted: Tue May 02 2006
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Section 2 1. Give an explanation of break-even analysis and explain how it supports the achievement of strategic aims and objectives. Break-even analysis compares a firm's revenue with its fixed and variable costs to identify the minimum sales level needed to make a profit. The starting point for all financial management is to know how much goods or services cost to produce. If a business knows how many products they have to sell, they can benefit from it because this can cover their costs. This is particularly important for new businesses with limited experience of their products or their markets. It is also of value for established businesses which are planning to produce a new product. A company whose aims and objectives are growth, continuity, investment, innovation etc can use break-even analysis as a cheap, quick and simple tool to analyse and estimate the future level of output they will need to produce and...
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