What is Cost-Benefit Analysis?
Cost-benefit analysis compares what an option costs against what it returns, in money, so alternatives can be ranked on evidence. Done honestly it includes indirect costs (training, disruption, maintenance) and attempts to price soft benefits — or at least names the ones it can't price.
It underpins project selection and the business case, and it feeds the benefit-measurement family: payback period, NPV, IRR, ROI.
Formula
Benefit-cost ratio (BCR) = benefits ÷ costs (BCR > 1 = benefits exceed costs)
Worked example
Automating a packaging line costs $900K installed, plus $60K/year maintenance. Benefits: $340K/year labor savings and 30% fewer damaged shipments (~$80K/year). Roughly $420K/year against $60K/year running cost on a $900K outlay — the BCR clears 1 comfortably within three years, and the CFO signs.