Take a position on which of the accounting reports (e.g., balance sheet, statement of cash flows, operating break even analysis, etc.) is most important to anyone interested in giving an entrepreneur funding. Support your position.

Discuss at what point an entrepreneur should consider calling it quits if the business only breaks even. Consider the factors involved in the decision to support your discussion.

Answer:

There are three statements which are interelated in order to analyse funding to any enterpreneur.

1. Balance sheet

2. Income statement

3. Statement of cash flow

Also, break even analysis plays an important role in decesion making regarding to calculate break even point for the oroduct both in terms of production and amount . It is that point where firms neither earns profit nor suffer losses. it is the duty of the firm first to analysis the break even point. Above break even point firm earn profit and below break even point firm suffer losses.

Balnace sheet ,it shows the value of assets that the company accumulated also, creditors position and liabilities . In order to provide funding balance sheet must be strong and from that various ratios like , debt equity rati , working capial ratio , stock turn over ratio , gross proofit ratio, net profit ratio also cash conversioon cycle must be studied which gives strong position regarding analysis of funding.

Statemnet of cash flow ,cash flow analysis is also important to know thevareas of cash inflow and cash outflow. Firm must analysis sources of cash from selling the product and also loan requirement. On the other hand , firm must analysis positive cash flow and negative cash flow.

Negative cash flow immediately signal to the investor not to invest. While positive cash flow attract the investor.

For funding to the enterpreneur one must analysis the income statement and the balance sheet of the firm. And also statemnt of cash flow plays an important role.

Break even Point: It is that point where firms neither earns profit nor suffer losses. it is the duty of the firm first to analysis the break even point. Above break even point firm earn profit and below break even point firm suffer losses. so for the profitability point of view every firm calculate ite break even point for the production as well as for the amount.

A break even analysis is a financial tool which helps us to determine at what stage firm will be profitable. It is a financial calculation for determining the number of product or services a company should sell to cover its cost both fixed cost and variable cost. It is the point at which total cost of the firm is equal to total revenue.

There are two component of break even analysis ,. 1. Fixed cost 2. Variable cost

Fixed cost is a cost which remaines fixed at all the level of activity, whether production more or less this cost remains constant.

Variable cost is a cost which varies with level of activity , it means as the production increases variable cost rises and if production falls variable cost decline.

Break even analysis is useful for the following reason;

- It help to determine imact of profit.

- It help to determine change in profit if the price of the product changes.

- It also helps to determine the amount of loses that could be sustained if there is a decline in sale.

- It also help to determing remaining capacity of the firm ,once the break even is reached , this will help to show maximum profit that can be generated for a particular product or services.

Therefore, it is to be analysed that properly monitor the break even for the management is necessary.

Break even analysis is a key component in any business plan for funding issue company must prove that plan is viable. Through break even it is helpful to analyse that a firm covering all its fixed cost.