Almost every manager sets a goal before opening a new business – to quickly recoup investments and start making a profit. The break-even point can help get closer to this goal. You are reading the magazine Compass – a messenger for effective and safe teamwork. Learn more about Compass In other words, the break-even point is one of the. Most important indicators that demonstrates. How profitable will the company be given the given parameters.
What is the plan and what needs
To be done to break even and generate income. In this article, we will take a closer look at the concept of “break-even point”. We will analyze why it needs to be netherlands phone number library calculated, how to do it, what parameters and possibilities should be known and taken into account. We will learn how to build a break-even point graph and use it. In the end, we will consider how to analyze the break-even point to get the correct result. What is the break-even point and the purposes of its calculation.
The break-even point (BEP) is a certain
Volume of sales of goods or services at to all its costs. The break-even point is more like a kind of threshold. Additional sales above this threshold allow you to make a profit. For entrepreneurs, understanding this indicator and taking it into account are essential elements of business management.
This point has other names, for example
CVP analysis or cost-volume-profit relationship (from the content is created not only to rank a website higher on google English cost, volume, profit); breakeven point; breakeven point; equilibrium point; cost recovery point. The purposes of calculating the breakeven point are varied and vary depending on the specifics of the business.
The breakeven point indicator will
Useful for understanding a large number of business snbd host processes both for the organization’s management and for external users: investors, creditors. CVP analysis is needed in order to: Analyze the cost price (prices of raw materials, labor costs, etc.) and establish the most profitable and optimal cost of production. Determine the required volume of revenue and sales at which the business minimally covers expenses and begins to generate profit . Estimate how long it will take for the project to pay for itself. To understand whether the production capacity is sufficient for the company to produce the required quantity of products without incurring losses.