Breakeven Analysis, also known as Cost-Volume-Profit (CVP) Analysis, is a managerial accounting technique in which costs are analyzed according to their fixed or variable nature and compared to sales revenue to determine the level of sales or production at which the business neither makes a profit nor incurs a loss.
Cost-Volume-Profit (CVP) analysis is a method used by businesses to understand the inter-relationships between cost, volume, and profit. It helps in decision-making by determining the break-even point, analyzing the profit potential of a company, and evaluating the impact of different levels of sales and production.
The Production-Volume Ratio (PV Ratio), also known as the Contribution Margin Ratio, is a performance metric that measures the proportion of sales revenue that exceeds variable costs. It's an essential indicator in assessing the profitability of products or services in cost-volume-profit analysis.
A metric used to measure the relationship between profit and sales volume, commonly referred to as the Contribution Margin Ratio, which indicates how much revenue from sales contributes to covering the fixed costs and generating profit.
