Plan Business Funding: If the business lacks sufficient capital for the project, it can approach to the external sources of funds, only after analyzing its break-even position which should be strong enough to pay off the debts. Smart Pricing: Break-even analysis is widely used by the companies for determining the appropriate price of the products or services such that the profit increases and the cost incurred are recovered.īetter Decision Making: It provides a solid base for decision making on the viability of a project leaving aside the emotional thinking.įigure Out Missing Expenses: While implementing the break-even analysis, the organizations can easily find out and include those expenses also which are otherwise left out or ignored. For instance, if the price is low, it becomes difficult for the company to attain a break-even position on time.īreak-even analysis has been widely used by the companies to determine the profitability of the business.įollowing are some of the advantages it has for business organizations: Prices: It is an essential tool for balancing the cost of a product and setting up a competitive price.New Product: Break-even analysis is also used by the management for monitoring the performance of a new product.Material: Material management becomes easy with break-even analysis since the company decides to advance the cost and quality of material to be used as input.Planning: The further plans of expansion or growth can be set easily if the management knows what exactly is to be aimed.
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