What Information Does a Break-Even Analysis Provide for a Firm

question 96

Multiple Choice

What information does a break-even analysis provide for a firm?

• A)a bottom-line estimate of the firm's profitability
• B)how much profit a firm needs to make before diversification can take place
• C)what market share the company needs to attain to surpass its competitors
• D)the length of time that it will take for a company to pay off all its debts
• E)how much the company needs to sell to cover its expenses

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Definitions:

Ending Inventory

At the close of an accounting cycle, the valuation of products set for sale, computed by taking the initial inventory, adding the acquisitions, and deducting the cost of goods sold.

Reported Net Income

The final profit figure stated in a company's financial statements, as reported to shareholders and used for earnings per share calculations.

Accrued Payroll

Salaries and wages that have been earned by employees but have not yet been paid by the company.

Consolidated Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as a single entity.