Chapter 5 is the only fully numerical chapter in CBSE Class 12 Entrepreneurship. It teaches the math an entrepreneur must run before, during, and after launching a venture: how to price a product, how many units must sell to break even, how much inventory to order, what return investors will earn, and how much working capital is needed to keep the lights on month-to-month.
The core building blocks are Unit Cost (Total Cost ÷ Units), Unit Price / Sale, Fixed vs Variable Costs, and the Contribution per Unit (Selling Price − Variable Cost). These feed into the most-tested formula in the chapter: the Break-Even Point — the number of units a venture must sell to cover all fixed costs, beyond which every additional unit generates profit equal to contribution.
Other formulas covered: Margin of Safety (Actual Sales − BEP Sales), EOQ (Economic Order Quantity, balancing ordering cost vs holding cost), ROI (Return on Investment), ROE (Return on Equity), Working Capital (Current Assets − Current Liabilities), and Cash Flow (Inflow − Outflow). Every formula is paired with a worked Indian-rupee example so the maths is grounded in real numbers.
BEP (units) = Fixed Cost ÷ Contribution per Unit · Contribution = SP − VC. e.g. FC ₹2L, SP ₹100, VC ₹60 → BEP = 2,00,000 ÷ 40 = 5,000 units.MoS = Actual Sales − BEP Sales · The buffer between current sales and the break-even line. Higher MoS = more cushion against a downturn.Contribution = Selling Price − Variable Cost · The amount each unit contributes towards covering Fixed Costs (and then to Profit, after BEP is crossed).EOQ = √(2 × A × O ÷ C) where A = annual demand, O = ordering cost / order, C = carrying cost / unit / year. Order quantity that minimises total inventory cost.ROI = (Profit ÷ Total Investment) × 100 · ROE = (PAT ÷ Shareholders' Equity) × 100 · ROI is total-capital efficiency; ROE is owner-only return.WC = Current Assets − Current Liabilities · Positive WC = liquid; negative WC = at risk of cash crunch. Decides if rent + salaries can be paid next month.