Is it more important for an entrepreneur to track cash or profits? Does it depend on the type of business and/or industry? What troubles will an entrepreneur face if she or he tracks only profits and ignores cash? What troubles will an entrepreneur face if she or he tracks only cash and ignores profits?
What volume of sales is required to reach breakeven for the following business: The variable cost of producing one unit of the product is $5, the fixed costs of plant and labor are $500,000, and the selling price of a single product is $50. It is not always easy to classify a cost as fixed or variable. What happens to the breakeven calculated above if some of the fixed costs are reclassified as variable costs? What happens if the reverse is the case-some of the variable costs are classified as fixed costs?
How useful is a financial plan when it is based on assumptions of the future and we are confident that these assumptions are not going to be 100 percent correct?
