Business Analytics: Benefits and Limitations of Break-even Analysis

Business Analytic

Contents
INTRODUCTION...........................................................................................................................3
Question 1........................................................................................................................................3
Mathematical Model:...................................................................................................................3
Calculate the profit or loss for BF Ltd:........................................................................................3
Draw a graph with a spreadsheet:................................................................................................4
Question 2........................................................................................................................................5
a. Correlation coefficient of advertising/sales and comment:......................................................5
b. Plot a scatter diagram:..............................................................................................................6
Analysis: ......................................................................................................................................6
c. ..................................................................................................................................................6
Question 3........................................................................................................................................6
Determine:....................................................................................................................................6
When company’s target profit for the year is £56000:.................................................................7
Break even chart:..........................................................................................................................7
Critically analyse the benefits and limitations of the breakeven model:......................................8
CONCLUSION..............................................................................................................................10
References......................................................................................................................................12

INTRODUCTION
Business Analytics (BA) relates to a procedure in which organisations use computational
tools and technology to analyse historical/past data in attempt to obtain new insights and enhance
strategic decision-making. Business Analytics is an iterative, methodological study of data of the
enterprise, with a focus on mathematical analysis. BA is used by businesses that employ data-
driven decision-makings (Evans, 2017). Data-driven businesses regard their data as corporate
commodity and aggressively pursue opportunities to transform it into competitive advantage.
Effective business analytics relies on data accuracy, on trained analysts who understand
technology and business, as well as on an organisational willingness to use data to generate
insights which inform strategic decisions. A great business analytics platform would be simple
enough for popular business customer, but that also allows more sophisticated customers to take
benefits of its capabilities. Organizations use Business Analytics to make choices based on
findings. Business analytics offers an outstanding analysis and insight into how businesses
should be more effective, which allows those companies to simplify their operations, as well as
to automate them. The study consists of different aspects of business analytics through different
practical tasks along with critical analysis of results.
Question 1
Mathematical Model:

Calculate the profit or loss for BF Ltd:
Budgeted
annual
output
120000
units
Fixed cost 40000
Variable
costs
0.5
Sales price 1
Units Rate Amounts
Sales 120000 1 120000
Less: Variable
costs
120000 0.5 60000
Contribution [Sales less variable
costs}
60000
Less: Fixed costs 40000
Profit 20000
Draw a graph with a spreadsheet:
Units Rate Year
2021
Year
2022
Year
2023
Year
2024
Year
2025
Year 2026
Sales 120000 1 120000 126000 132300 138915 145860.
8
153153.8
Less: Variable
costs
120000 0.5 60000 66000 72600 79860 87846 96630.6
Contribution 60000 60000 59700 59055 58014.7
5
56523.19
Less: Fixed costs 40000 40000 40000 40000 40000 40000
Profit 20000 20000 19700 19055 18014.7
5
16523.19