Explain break-even analysis and summarize the main ratios that measure it.

Details: Your team is exceeding expectations across the board. In fact, you and your department are doing so well, that the CEO has asked you to attend the financial meeting with the board of directors. She states that you might be asked to report on your overall performance. Understandably, you are a tad nervous as you prefer not to speak in front of people, let alone to an entire board of “bosses.”

As you sit in your office and anticipate the meeting, which is tomorrow, you realize that despite your understanding of your department’s finances, you really don’t fully grasp how it relates to the “big picture.” You call the chief financial officer and although he can’t meet with you, he says that he will leave a list of key terms and things to know with his assistant.

You pick up the list and there is only one terms on the paper “Break – Even Analysis.” You turn to the secretary, and seeing the question in your eye, she says “He said that’s all you need to know.” You take the list and turn to head back to your office. As you leave she calls after you, “Almost forgot – he said that you need to know the main ratios behind break-even.”

Resources to consult: Textbook

Specific questions or items to address: In a 2-page analytical research paper, explain break-even analysis and summarize the main ratios that measure it. In your analysis, be sure to explain how break even works with both tangible products and non-tangible services.

 

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Explain break-even analysis and summarize the main ratios that measure it.

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