Introduction
Smart GMBH is a manufacturer of specialist building mortars. It has planned to produce new production ¡§Royal Mortars¡¨ to enter new market segment in Europe. For this purpose, Smart consider to investment to expand capacity from 1,000 units to 3,000 units. At the same time, increase the market expenditure is also can change the market share of company. Several changes will happen to the Smart GMBH. Base on the fact was given in the case, make a correct decision to lead development of company become important responsibility to a finance manager.
Sensitive analysis is one of necessary part to this report. Through volume of calculation, it changes the fact and data was given in the case to useful information. Break even point was used to decide whether Smart GMBH should go into the new market segment in Europe. In the further analysis, Expect Vale and risk was used to compare the approach of maximum the profit of company. The sensitive analysis becomes the fundamental evidence for finance manager to make decision of company.
Break-even point
The break-even point is defined as the point where sales or revenues equal expenses. There is no profit made or loss incurred at the break-even point. It is important for anyone that manages a business since the break-even point is the lower limit of profit when setting prices and determining margins. Obviously the break-even point becomes very important when calculating a strategy for net profit.
The major benefit to using break-even analysis is that it indicates the lowest amount of business activity necessary to prevent losses.
Figure 1 Smart GMBH produce up to 1,000 units of the new product
According to the data from the case, the report finds out the relationship betw ...