【A.04.00】How are these techniques helpful in business?

Briefing Note
Reading comprehension is a skill that empowers lifelong learning intelligence for a better self.
Break-even analysis and Cost-Volume-Profit (CVP) analysis..

✅ ..both helpful tools for businesses as they provide valuable insights into the financial performance of a company.


Break-even Analysis..

✅ ..helps businesses determine the point at which their total revenue equals total expenses, including fixed and variable costs.

✅ ..helps businesses answer questions such as,

🤔 “how many units do we need to sell to cover our costs?” or

🤔 “what price do we need to charge to reach our target profit?”.


By identifying the break-even point..

✅ ..businesses can set their pricing and sales targets to ensure that they will achieve the target profit.


Cost-Volume-Profit (CVP) Analysis..

✅ ..helps businesses determine the relationship between costs, sales, and profits.

✅ ..takes into account the fixed costs, variable costs, selling price per unit, and sales volume.

✅ ..helps businesses understand how changes in any of these factors can affect the overall profitability of the business.

✅ ..helps businesses answer questions like

🤔 “What is the minimum level of sales we need to reach to break even?”, or

🤔 “How will a price increase or decrease impact our profit?”


Both break-even analysis and CVP analysis..

✅ ..help businesses make better and more informed decisions about pricing, production, and sales targets, and ultimately, help them achieve their financial goals..


Here is the video for dynamic comprehension..

Here is the briefing note for reading comprehension..