What is the break even analysis definition?

There are two definitions we are perhaps looking for here. The first is “what is the break-even point?”. This is the point where revenue derived from an entity’s sales equals the total costs (both fixed and variable) incurred to generate those sales. Fixed costs refer to costs that remain the same within a range of sales. While, quite obviously, variable costs proportionally change to the change in sales within a set range.

The second question is then: “what is break-even analysis?”. Building on from what a break-even point (BEP) is, the analysis side is working through a range of scenarios as to how a firm can optimise its BEP, and in particular in seeing how fixed and variable costs can be changed (in total and per unit respectively) across different sales ranges. For example. by increasing capital investment and therefore fixed costs, can greater efficiencies be generated by growing sales volume.

Why forex trading is popular?

One can appreciate why this niche attracts so many newbies; in particular how it is advertised. “No money needed. No experience needed. Work from the beach. Only a few hours a week. Buy our system and results are guaranteed!”. You know the type of hype. And yet few people do well with trading – perhaps because few of us are built to be good traders. And the quality of the training being sold doesn’t live up to the promises made.

gearing

Yes, payables (which are short-term borrowings) should be included in the gearing ratio.

The gearing ratio is a measure of the amount of financial leverage an entity is carrying. Which is a fancy way of looking at how much of its net worth is funded from debt.

The general gearing formula used is:

(long-term debt + short-term debt) / capital

Are notes payable on the income statement?

The effect of notes payable for the issuing entity actually shows up in the three main financial statements; the statement of financial performance, the statement of financial position and the statement of cashflows.

The first statement reflects the interest payments and amortisation costs of the instruments. The second statement reflects the liability or borrowing side and movement in principle still to be repaid. While the third statement reflects the cash being received when the notes are issued and then over the period of the notes any interest and principle repayment (or at maturity if only repayable at this point).

Are net earnings and net income the same thing?

Yes, they are the same thing. We would normally call the figure at the end of the income statement (profit and loss statement) the net profit/(loss). It is clearer to a reader as to what we are then referring to; ie, did the entity make a profit or loss in the reporting period. Net earnings or net income can lead to some confusion in that some people use the term to refer to the netting off of income – which of course should not normally be done.

Are stock dividends income?

Yes, dividend income is considered the receipt of economic benefits and so like any other revenue is recognised by the receiving entity.

For most reporting entities, because this type of income does not form part of their normal operations it should be disclosed below operating profit or loss; just as interest generally is. This enables the user of the report to better evaluate the operating and non-operating sides of the entity.