Explain What Is Meant by Limited Liability

question 42

Essay

Explain what is meant by limited liability.

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, contributing towards covering fixed costs and generating profit.

Financial Break-even

The point at which total revenues equal total costs, resulting in no profit or loss for the business.

Financial Break-even

The point at which total revenues are equal to total operating expenses and financial costs, meaning the company makes no profit but also incurs no loss.

Payback Period

The amount of time required for an investment to generate cash flows to recover its initial cost.