Question

An analysis of the relationship between the sales volume and accounting profitability is called _____ analysis.

forecasting

scenario

sensitivity

simulation

break-even

Answer 1

The analysis between the sales volume and profitability is called break - even. A break-even analysis is a useful tool for determining at what point your company, or a new product or service, will be profitable.

Break even is the level of sales volume to be achieved to atleast cover the fixed costs and variable costs.

So, the correct option is option 5.

Sensitivity analysis :

An analysis of what happens to the estimate of net present value when only one variable is changed .

Scenario: An analysis of what happens to the estimate of the net present value when you examine a number of different likely situations

Simulation analysis: An analysis which combines scenario analysis and sensitivity analysis.

Forecasting : is a tool which helps businesses predict the future growth and helps the business in planning and budgeting.