Page 46 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
In the study when asked about the effectiveness of the
break-even analysis for the rm majority (40%) of the
respondent rms have shown their strong agreement on
BEP’s help in determining the number of units to be sold.
The majority (44%) of the respondent rms are agreed
that break even analysis helps in budgeting and setting
targets. The majority (36%) of the rms have shown their
agreement on use of BEP in determining margin of
safety. The majority (42%) of the rms are agreed that
helps in cost control and monitoring the business
operations and protability. The majority (42%) of the
rms are agreed that helps to devise a pricing strategy for
the products offered by the rm. The statistical analysis
supports the degree of agreement of majority of the
respondent rms, for the given uses of the break-even
analysis for the cost management of the respondent
MSMEs.
It is found that the rms have complete understanding of
the quantum and signicance of the xed cost and its
role in cost management and have clear ideas about the
break-even analysis and breakeven point of their specic
products. Most of the respondent rms are agreed that
break even analysis helps them in budgeting and setting
targets, in determining margin of safety, in cost control
and monitoring the business operations and protability
and to devise a pricing strategy for the products offered
by the rm.
Protability Analysis
An analysis of cost and revenue of the rm which
determines whether the rm is proting is known as
protability analysis. The key parameters to measure the
protability of the rm are gross prot margin, net prot
margin and business segment prot. The growth
prospects for the company and achievement of wealth
maximisation goal are generally gauged based on trends