Week 10 Reading Reflection

For this week’s reading, it is very hard for me to say that something surprised me given that the vast

majority of its content are the basics of accounting, which is very fresh in my mind since I’m currently

taking the course principles of financial accounting. But there is one thing that stuck out, and it was this chapter’s “Entrepreneurial Thought.” I had never thought about how hiring outside accountants could have a negative impact on a company’s performance.

I didn’t understand the graphic approach of break-even analysis, it just wasn’t clear and hard to follow, at least for me.

Two questions for the author:

1.       When looking at financial ratios what would you consider the most critical for investors when looking at startups?

2.       How could a startup that relies on a free service or product utilize break-even analysis? If possible.

The reason I ask these questions is because I wish to have a better understanding of startups that give a free service. Why do investors put money on something that isn’t giving much in return? That is what I wish to understand.

There was really no opinion from the author into this chapter. It was mostly based on formulas and rules on accounting, but I didn’t agree with the author jamming all that information into one chapter. This is extremely important concepts that aspiring entrepreneurs should know, and I can imagine that it must’ve been difficult to follow for people that have never read or learned about these topics.