accounting and finance for Business Analysis.pdf


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Chapter 4: Break-Even and Cost-Volume-Profit Analysis ..................................................................................... 40
Learning Objectives ............................................................................................................................................. 40
What is Cost-Volume Profit Analysis? ................................................................................................................. 40
What and Why of Break-Even Sales .................................................................................................................... 41
What is Margin of Safety? ................................................................................................................................... 45
Cash Break-Even Point ........................................................................................................................................ 46
What is Operating Leverage? .............................................................................................................................. 46
Sales Mix Analysis ............................................................................................................................................... 48
Conclusion ........................................................................................................................................................... 50
Chapter 5: Relevant Cost and Making Short-Term Decisions ............................................................................... 54
Learning Objectives ............................................................................................................................................. 54
What Costs Are Relevant to You? ....................................................................................................................... 54
Accepting or Rejecting a Special Order ............................................................................................................... 56
Pricing Standard Products ................................................................................................................................... 57
Determining Whether to Sell or Process Further................................................................................................ 60
Adding or Dropping a Product Line ..................................................................................................................... 60
Utilizing Scarce Resources ................................................................................................................................... 62
Don’t Forget the Qualitative Factors .................................................................................................................. 63
Conclusion ........................................................................................................................................................... 63
Chapter 6: Forecasting Cash Needs and Budgeting .............................................................................................. 66
Learning Objectives ............................................................................................................................................. 66
Forecasts ............................................................................................................................................................. 66
Using Forecasts ................................................................................................................................................... 67
Preparing Financial Forecasts ............................................................................................................................. 68
Budgets ............................................................................................................................................................... 70

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