Break Even

Question 1

Inflow - ? = PROFIT what is the answer?

Answer 1

Outflow

Question 2

What is break even point?

Answer 2

Break even point is where a business’ costs are equal to its revenue

Question 3

What is the break even formulae?

Answer 3

fixed costs
______________

Selling prices - variable costs

Question 4

Is the break even point measured in ‘£’ or units sold?

Answer 4

Units sold

Question 5

What is the Margin Of Safety?

Answer 5

The margin of safety is the difference between the intrinsic value of a stock and its market price.

Question 6

What is Total Revenue?

Answer 6

Total revenue is economics refers to the total receipts from sales of a given quantity of goods or services.

Question 7

What is Total Costs?

Answer 7

Total costs refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained.

Question 8

What are the benefits of Break even?

Answer 8

Strengths:

• It is a relatively simple concept and the formula can be understood and used by most entrepreneurs
• The information it provides can be vital when taking a decision whether or not to go ahead with a business proposal
• It is widely used to support applications from entrepreneurs for loans

Question 9

What are the limitations of Break even?

Answer 9

Some limitations of break-even analysis include: It is only a supply side (i.e. costs only) analysis, as it tells you nothing about what sales are actually likely to be for the product at these various prices. It assumes that fixed costs (FC) are constant.