Question

Evaluate the profitability and assess the return on investment in the company

Assess the company's operating capability and financial performance for the current period and over time
Evaluate management's performance
Predict the company's future income and cash flows
Understand the components of income
Assess the company's risk
Compare performance against other companies
Assess the impact of economic factors on the company

Answer 1

To evaluate the profitability of a company, compare total revenue and total cost. Use the average cost curve to identify profits and losses, and determine the price at which a firm should continue producing in the short run.

Step-by-step explanation:

Profits in a company can be evaluated by comparing the total revenue and total cost. If the total revenue exceeds the total cost, the company is profitable, and if the total cost exceeds the total revenue, the company is making a loss. The average cost curve can be used to identify profits and losses. The shutdown point is the price at which a firm should continue producing in the short run.