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Fundamentals of Financial Management, Third Edition
book

Fundamentals of Financial Management, Third Edition

by Vyuptakesh Sharan
August 2011
Beginner
547 pages
16h 12m
English
Pearson India
Content preview from Fundamentals of Financial Management, Third Edition
20.6 LIMITATIONS OF BREAK-EVEN ANALYSIS

Despite the usefulness of the break-even analysis in the decision-making process, there are certain limitations to its usefulness. The results shown are often not completely accurate under all conditions, insofar as there are a number of factors which could influence them appreciably. For example, an increase in selling price may cause a reduction in the sales volume which is generally not taken into account in this analysis. Again, if the firm sells more than one product, the break-even chart of the firm as a whole, showing cost and revenue, does not truly represent these variables for any one product. Yet again, this analysis does not take into consideration the capital employed which may be a very important ...

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Publisher Resources

ISBN: 9789332508170