After this video, learners will be able to ask the right questions to determine break-even by looking at all cost and all potential income.
- Let's consider a really simple example … to illustrate a very complex point. … It's summertime and I'm going into the snow cone business. … You know, finely crushed ice that is flavored. … Perfect for those hot summer days. … Can this business be profitable? … Well, that depends on how many customers you can expect … and we can compute the number of customers, … we will need through a careful analysis … of our fixed and variables costs. … 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 10 people stop by, … then we will have a problem. … And it turns out, we can calculate how many people will need …
- Describe how decision-makers use accounting in a business.
- Recognize limitations in financial statement analysis.
- Relate the purpose of financial ratio analysis.
- Determine the primary reason for managing cash through the operating cycle.
- Define the role of efficiency in creating budgets.
- Identify differences between federal income tax and other taxes, such as state sales tax.