For the professional manager, finance is the empirical discipline that translates operational activity into measurable economic outcomes. It is the language of value creation, resource allocation, and risk control.
Posts tagged as “Variable Cost”
Understanding your unit economics is fundamental to the long-term sustainability and profitability of any business, regardless of its size or industry.
Contribution refers to the portion of revenue that remains after deducting variable costs. It’s essentially what’s left to cover fixed costs and generate profit.
This article explains the difference between production in the short run and production in the long run. And, it describes Law of Diminishing Returns.
There are several different pricing strategies that can be used and these are broadly categorized into four different categories.
This article introduces the main parts of a typical Cash Flow Statement. All Cash Flow Statements record essential predictions grouped into five basic sections.
As a business manager, you can improve Gross Profit of your business by either increasing Sales Revenue or decreasing the cost of production.
Break-even Analysis provides information about break-even levels, the level of actual demand, Target Profit and Margin of Safety.
It is quite easy to use and calculate the Total Contribution formula to calculate the business’s profit. And then, to figure out how to increase profit.
Contribution Analysis can help a business organization to identify products in its Product Portfolio that are relatively profitable.
Calculating Target Profit is not that difficult. And, it is possible to use the Break-even Chart and the Break-even Analysis to find it out.
To properly construct the Break-even Chart, we need to plot the curves that indicate Sales Revenue and Total Costs (TC). Use the following five rules.
Break-even Quantity shows the level of output that the business must produce and sell at which Sales Revenue equals Total Costs (TC).
Break-even Quantity shows the level of output that the business must produce and sell at which Sales Revenue equals Total Costs (TC).