Help on assignment?

im doing a assisnment for college and need help answering a few questions

why is breakeven cheap and easy?

why can breakeven help when applying for a bank loan?

Help on assignment?

I am not absolutely sure what you mean here.

Break even analysis is an easy way to establish how much business you need to do before you start making a profit.

Example

Assume you had a cafe with overheads of 鎷?000 per month

Assume you only sold cups of tea or coffee

Assume you make a margin ( ie selling price less the cost of the materials) of 鎷?50 per cup

Then just to break even ( assuming that you sold nothing else) you would need to sell 鎷?000/鎷?50p

= 2000 cups per month.

Assuming there are (say) 20 working days in the month this would mean that you would have to sell 100 cups per day - BEFORE you started to make a profit.

Banks obviously like this approach to business planning because it means (to them) that you have thought about your buisness at a suitable level of detail and that you are not going into it blind.