Join Jim Stice for an in-depth discussion in this video How to calculate your break-even point, part of Finance for Non-Financial Managers.
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- In the previous video, we talking about the necessity…of considering all your costs when trying…to determine if you can compete in a market.…Okay, so now the big question:…can we be profitable, given a market price…of $2 per snow cone?…That's a tough question to answer,…and it's also the wrong question to ask.…But if we're determined to remain…a "not numbers person" our entire life,…those are the types of questions we will be asking,…the wrong questions.…The right question to ask is:…how many people must come for us to be profitable?…Clearly, if a million people stop by…and buy snow cones, we will be profitable.…
If only ten people stop by, then we will have a problem.…And it turns out, we can calculate how many people…will need to stop by for us to, what is called, break even.…We can compute our Break-Even Point,…that is the point at which we exactly cover our fixed costs.…In other words, we haven't made money,…and we haven't lost money, we've broken even.…So how do we do that?…Well, we now need to track our fixed costs.…
- Interpret financial reports and make decisions based on available data
- Manage inventory and receivables
- Create an accurate budget
- Cost a product or service
- Analyze customers
- Understand your income taxes
- Communicate your contribution to the bottom line
Skill Level Appropriate for all
1. Understanding Finance and Accounting
2. Most Common Financial Reports
3. Techniques for Using Financial Reports
4. Short-Term Financial Management
5. Costing a Product or Service
Drafting a budget4m 59s
7. Income Taxes
Next steps1m 38s
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