Question

True or false:

breakeven point is NOT a good planning tool since the goal of business is to make a profit

Answer 1

Answer:False

the break-even point is that golden number your business must surpass to make a profit. Knowing your break-even point is important because it tells you how much revenue (sales) your business has to generate to cover expenses. Anything above this amount provides you with extra cash to reinvest in your business and/or pay your own salary. But calculating the break-even point is like trying to predict weather. Shifting variables make it difficult to lock down firm figures with perfect accuracy. However, there is a simple process called a break-even analysis that helps you understand how profits change as revenues fluctuate. It is a useful tool for forecasting your break-even point in any given situation.