Summary
In this section, you have learned how important break-even analysis is as a
business-monitoring tool. We have discussed variations of the
break-even analysis and examples of how to use them within the
business. We have shown how to use the break-even analysis
and its variations:
- Test the feasibility of new business ventures and
offering introductions - Test the effect of changes in market conditions
- Price offerings at a profitable level
If you are preparing an internal business plan, the next step is to prepare:
- Pro-Forma Cash Flow Statements (found below)
- Operating Statements
These will forecast the actual results in detail for the next year's operations and
include summary projections for at least the following two years. We will outline
what is necessary in the next section.