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Definition of 'Cost-Benefit Analysis'
A process by which business decisions are analyzed. The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted. Some consultants or analysts also build the model to put a dollar value on intangible items, such as the benefits and costs associated with living in a certain town. Most analysts will also factor opportunity cost into such equations.
Prior to erecting a new plant or taking on a new project, prudent managers will conduct a cost-benefit analysis as a means of evaluating all of the potential costs and revenues that may be generated if the project is completed. The outcome of the analysis will determine whether the project is financially feasible, or if another project should be pursued.
mean compare the cost of any project with the profited genrated from that project....and ensure that profit exceed cost..which will be a selection criteria...
Cost-benefit analysis is a business decision-making process by which the benefit that will be derived while taking/not taking the decision is compared to the costs to be incurred correspondingly to derive that benefit and decision is taken to proceed or not based on the net result.The cost and benefit may be monetary or non monetary.
The comparison between the cost of something and the estimated return to be able to take the correct decision.
Determining the return on a given investment for a specific period of time. Expected revenue (this may include fainancial and non-fainancial measured in fainancial terms) - total cost = benefit.
