Breakeven Analysis and Operating Leverage
Understanding Cash Flow
Key Topics Covered in This Chapter
•The concepts of fixed costs, variable costs, and contribution margin
•How to determine breakeven on a fixed investment
•The benefits and dangers of operating leverage Understanding Cash Flow
THIS CHAPTER explains breakeven analysis, another financial tool that many managers find useful in making decisions. Explaining this tool introduces several other financial concepts that every manager should understand: fixed costs, variable costs, contribution margin, and operating leverage.
Breakeven analysis indicates how much (or how much more) you ...
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