Expert answer:Business Strategy Paper
Solved by verified expert:Discuss the best way to leverage a break even analysis when defining a business strategy.
In order for a business to break even with sales, sales revenue
generated will have to cover total fixed and variable expense. Some
entrepreneurs find it more meaningful to break down their companies’
annual break-even point into a daily sales figure. Analysis can be
adjusted to consider such a possibility.
Analyze
the 12 financial ratios mentioned in the textbook and determine which
is the most useful to the greatest number of small businesses. Explain
your rationale.
According to the chapter reading, few business owners actually
compute financial ratios and use them in managing their businesses.
However, a clever business owner use financial ratio analysis to
identify problems in their businesses while they are still problems, not
business-threatening crises. I believe that times interest earned ratio is of vital importance to
small businesses. This is a measure of a small company’s ability to
make the interest payments on its debt. It tells how many times the
company’s earnings cover the interest payments on the debt it is
carrying. This ratio measures the size of the cushion a company has in
covering the interest of its debt load. The more interest a company pays toward its debt, the less they owe.
A high times interest earned ratio suggest that the company has little
difficulty meeting the interest payments on its loans; creditors see
this as a sign of safety for future loans.This will help in the financial stability of the organization.
Having a good financial reputation is a plus in securing future
investors in the company. 26 mins ago
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